Mizuho's Jared Holz on why he is bullish on biotech heading into 2026

? (?) 00:00.150

welcome back healthcare is the best performing sector over the last three months as investors rotate out of high flying tech and AI names in favor of better valuations our next guest is here with his outlook for the sector and his best ideas for twenty twenty six jared holtz is

? (?) 00:13.670

a healthcare strategist at mizuho jared before we get to the what i think is the most interesting part of this let's do the broad overview had a nice run

Jared Holtz (Health Care Strategist) 00:22.710

is it over

? (?) 00:23.270

does it continue the twenty twenty six for the sector i think it'll

Jared Holtz (Health Care Strategist) 00:25.710

continue for a little bit it's still been a multi year laggard underperform the by twenty percent in in twenty twenty three and twenty twenty four this year about a five percent laggard so i think there's still room to go it's been a nice six months but i think there's a a

Jared Holtz (Health Care Strategist) 00:40.190

reason to be bullish you can

? (?) 00:41.910

have a rotation because people are scared of where they were or you could have a rotation because people are happy about where they are which one is it for health care

Jared Holtz (Health Care Strategist) 00:49.550

i think it's a combination of both i think you obviously have to be cognizant of what's happening in big tech is the you know the main driver of the market right

? (?) 00:57.550

but i think

Jared Holtz (Health Care Strategist) 00:57.910

we're finally starting to thaw out a little bit i think the drug pricing rhetoric for me is the biggest thesis behind getting more positive on health care it's been such a noisy year as far as drug pricing we have the IRA kicking in next year most favored nations has been

Jared Holtz (Health Care Strategist) 01:11.790

discussed a dozen pharma companies have agreed with the white house on on pricing mechanics so i think that out of the way leads to a better year for pharma biotech and kind of anything associated with it i

? (?) 01:23.150

still have one more question before we get to the most interesting part but walk me through the day in the life of the healthcare analyst who wakes up in the morning and the president has tweeted out that he wants drug prices lowered by thirty percent at three in the morning

? (?) 01:33.950

what's that like

Jared Holtz (Health Care Strategist) 01:35.360

it's nightmare it's really nightmarish

? (?) 01:37.000

it's

Jared Holtz (Health Care Strategist) 01:37.920

been tough i think it's been it was tough in the first administration i think even with biden with with the IRA and trying to figure that out right difficult and now with you know all the theatrics behind you know this second trump administration it's very difficult

? (?) 01:51.110

so do you like wake up cup of coffee to the spreadsheet put the new drug price in and come up with a new PE outlook is that how that works

Jared Holtz (Health Care Strategist) 01:59.350

i think it's a little bit more complicated than that part of it is that but you know the the multiples in pharma have obviously they've gone up a lot since all this pricing so i think investors are finally saying maybe we can own the group now that the news is out of the way

Jared Holtz (Health Care Strategist) 02:12.230

alright

? (?) 02:12.510

let's come back to that but i do want to get to this issue of biotech which you think is the most interesting look for next year walk me through why that is

Jared Holtz (Health Care Strategist) 02:19.670

well it's it's been a great four to six months the best we've seen i don't believe that the XBI and that's really the best proxy for a small and midcap biotech has ever had six months of positive returns in a row dating back to the genesis of this index there were

? (?) 02:35.870

some bull markets for biotech so the fact that you're saying that about this stretch now is can they get that up

? (?) 02:40.470

XPI up i'd like to take a look at that that that because walk me through what what the outlook is

Jared Holtz (Health Care Strategist) 02:45.790

yeah so it's been a nice ride i think a few things are of note i think the negative narrative around drug pricing and so many of the things that we've talked about for the better part of five years are starting to evaporate a bit you do have this narrative around interest rates

Jared Holtz (Health Care Strategist) 03:04.960

going lower i think that's helpful although there isn't perfect correlation i think it does help investors get their hands around this the denominator of biotech stocks start stopped increasing exponentially that to me was the biggest reason to be bearish for so long we had too

Jared Holtz (Health Care Strategist) 03:19.880

many assets to kind of contend with and analyze and then the the other thing is there's been so much merger activity

? (?) 03:25.870

mania twenty

Jared Holtz (Health Care Strategist) 03:27.030

twenty deals over five hundred million dollars just this year in publicly traded equities not to mention a bunch in the private domain too what

? (?) 03:35.190

about the AI promise in this field people are talking about the idea that the computer puts molecules together that humans can't do

Jared Holtz (Health Care Strategist) 03:43.350

if anything it's a positive right it's tough to say how dramatic of an impact it's going to have if you ask the pharma companies i think they've been using computer guided models for drug discovery for the better part of a decade so i i don't think the industry thinks there are

Jared Holtz (Health Care Strategist) 03:56.030

major shifts happening but if you had to gamble on one way or the other it's going to be more helpful i'm sorry

? (?) 04:01.230

i have one more question on the politics of it is this a sector that you you think is one where investors should be concerned because there's so much interest from the political world and the idea of for example when the president says health insurance companies are making too

? (?) 04:13.950

much money and basically sort of cramming down on that and and all that influences that one where investors should be wary of of the sector for that region

Jared Holtz (Health Care Strategist) 04:21.470

definitely i think that's been the the chief variable that's that's caused its demise or underperformance over the past few years for sure