Investment bank Jefferies has published its third annual Jefferies Healthcare Temperature Check providing feedback from 500 healthcare senior leaders, including major investors and chief executives.

Key findings include:

• A rebound of M&A is anticipated by investors and corporates alike in 2021 with 64% of all respondents expecting it to be higher in next year. Corporate M&A is expected to be the most prominent type of deal, with private equity also active

• The majority of respondents expect healthcare stocks to increase in value over the next 12 months, with nearly half also anticipating a recovery in broader markets

• Vaccines are seen to be a key area of innovation moving into 2021, and are anticipated to have a major impact next year. The prospect of a Covid-19 vaccine is believed to be one of the current reasons for the outperformance of healthcare stocks

• While North America continues to be identified as having the greatest potential for value creation, China is also rising up the agenda this year, with almost a third identifying it as a region of strong potential value moving into 2021

• 2020 has seen an evolution of the threats facing the sector. Economic recession and Covid-19 disruption are high on the agenda, displacing political uncertainty and pricing pressure as the greatest perceived risk factors.

Tommy Erdei (pictured), Jefferies’ joint global head and European head of healthcare investment banking, said: “There is no doubt that healthcare will play a pivotal role in the recovery and rebuild from Covid-19 and this is reflected in both some of the confidence we have found, and challenges identified. At a high level, it is certainly encouraging to see significant optimism of a strong recovery as we move into next year. While volatility will continue, many are predicting that both healthcare stocks and broader markets will rise from current levels by this time in 2021 and noticeably few are anticipating declines from where we are now. I am also pleased to see strong anticipation of an M&A rebound in 2021; confidence in increased M&A activity in the coming 12 months is at its highest level since we started this report.

2020 has been a year that nobody could have predicted, but I am heartened to see such a strong level of confidence in the outlook for our sector.”

Read the full report here.

Date published: November 17, 2020

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