Connecting fundamentals and technicals
- STE up for year, but recently entered a correction
- Shares returned to former breakout level
- Analysts highlight pockets of strength in medical tech
Health care is the S&P 500’s weakest sector so far this year, but it may also provide a useful illustration of Morgan Stanley Wealth Management’s description of the current environment as a “stock picker’s market.”
As with any sector or index, there’s a wide range of performance below the surface. For example, the health care equipment & supplies industry group is up more than 6% of the year, while the life sciences tools & services group is down more than 18%.
Individual stock performance is even more varied. Within the relative strength of the health care equipment group, Glaukos (GKOS) is down more than 33% for the year, while the slumping life sciences industry includes Guardant Health (GH), which is up more than 50%.
Morgan Stanley & Co. research recently updated their analysis of one corner of the health care sector—medical tech, noting some of its potential over- and underperformers. For example, one of the companies discussed in their report is Steris (STE), which specializes in sterilization and decontamination. The analysts upgraded the stock to Overweight, while describing it as “largely uncorrelated to tariff or macro volatility overall.”1
Some traders may have already noticed the stock for other reasons. While shares are still up around 11% for the year, the stocked dipped into correction territory this week, closing more than 10% below its May high of $252.55:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
The retreat also dropped shares a little below a former short-term resistance level now potentially functioning as support. The stock’s breakout above this level (roughly $229) in early May immediately was quickly followed by its push to a three-year high.
A more liberal interpretation might view the stock’s pre-breakout price action as a multi-month consolidation, with the early-April tariff sell-off representing a brief (and anomalous) drop below the range’s lower boundary (around $215). In other words, the correction has returned shares to a zone that has, except for a handful of days in early April, supported prices since early February. Bulls interested in the stock’s longer-term thesis will likely be watching its performance in the coming days to see whether it looks like it has the potential to do so again.
Note: STE is currently scheduled to release earnings on August 11.
Market Mover Update: So-called “rare earths” stocks made headlines again this week as Apple (AAPL) announced a deal with MP Materials (MP) to ramp up US production of rare-earths magnets and a magnet recycling facility. On Wednesday, MP closed flat and USA Rare Earth (USAR) pulled back after posting double-digit percentage rallies on Tuesday (see “Rare move in the materials sector”).
Today’s numbers include (all times ET): weekly jobless claims (8:30 a.m.), retail sales (8:30 a.m.),
Philadelphia Fed Manufacturing Index (8:30 a.m.), import and export prices (8:30 a.m.), business inventories (10 a.m.), housing market index (10 a.m.), EIA Natural Gas Report (10:30 a.m.).
Today’s earnings include: Citizens Financial (CFG), Elevance Health (ELV), Fifth Third Bancorp (FITB), Netflix (NFLX), PepsiCo (PEP), Southern Copper (SCCO).
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1 MorganStanley.com. Shuffling the Deck. 7/15/25.