Healthcare Stocks Face a Foggy Road as Democrats Take Congress, Mizuho Analyst Says

Healthcare investors hoping for a clear runway should brace for a holding pattern. Jared Holz, who covers the sector for Mizuho, told CNBC's 'Fast Money' on Wednesday that with Democrats poised to take over Congress, the next couple of years look like gridlock rather than legislation. 'The next couple of years I really can't see too much happening,' he said.

That doesn't mean investors should sit out entirely — it means being choosy. Holz said he has backed away from pharma, which he noted is trading more expensive than tech for the first time in 20 years. His preferred hunting ground is medtech, particularly medical device names sitting at or near multi-year lows.

The sector's post-election pop didn't last long. The State Street Health Care Select ETF (XLV) jumped 3% the day after Election Day, a move Holz called 'just a little bit off' because categories that normally don't move together all rose at once. A day later, healthcare got caught up in Thursday's broad Wall Street sell-off.

Holz sees the real catalyst sitting further out on the calendar: the 2028 presidential race. If a Democrat wins the White House — and Democrats hold both the Senate and House — he expects some of the Trump-era strategies to get rolled back, a scenario he said is where healthcare could actually perform well.

On the nearer-term question of unwinding the regulation of the past few years, Holz is skeptical. 'I don't necessarily believe so,' he said, though he added that if that regulation does get overturned, medical device stocks scraping multi-year lows would be the place to be long.

The XLV ended the week virtually flat. Even so, it has climbed roughly 32% since President Trump took office in January 2025, outpacing the S&P 500 by almost 9 percentage points.