LIVE MARKETS-Split US congress after 2026 midterms could boost healthcare stocks, Mizuho says

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SPLIT US CONGRESS AFTER 2026 MIDTERMS COULD BOOST HEALTHCARE STOCKS, MIZUHO SAYS

A divided US Congress following the November midterm elections could serve as a "positive catalyst" for healthcare stocks by reducing policy uncertainty, Mizuho Securities analysts said in a research note on Friday.

Mizuho expects Democrats to take the House of Representatives while Republicans retain the Senate in a 50-50 split, creating a "balance-of-power in Washington."

Healthcare companies have historically performed better under divided government, and Mizuho expects gridlock to bring a "reduced likelihood of significant legislative changes." And that matters after what Mizuho described as two years of considerable legislative and regulatory changes.

Following the nine elections since 1992 that resulted in a balance of power, managed care stocks traded at an average of 13.3 times forward earnings, up from 12.5 times heading into the election.

The brokerage said diversified health insurers are best positioned, naming UnitedHealth Group UNH.N as the top pick in its coverage universe.

By contrast, a Democratic win in both chambers could revive fears of sweeping reform, including "renewed Medicare for All rhetoric," ahead of the 2028 presidential race.

Hospital operators such as HCA Healthcare HCA.N and Universal Health Services UHS.N are also expected to see steady valuations, while clinical lab companies, including Quest Diagnostics DGX.N and Labcorp LH.N, could see a near-term boost if Congress acts to delay planned Medicare payment cuts before year-end.

https://www.reuters.com/graphics/HEALTH-USA/lgvdbqmdlvo/chart.png

(Kamal Choudhury)

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