Up 2% five trading days into the new year, global health care stocks have already matched their return for all of 2023. It’s very early, but the sector has outpaced all other 10 economic groups since the ball dropped in Times Square. Following a year that was dominated by technology, could 2024 be the year of the health care stock?

Maybe so.

As investors piled into mega cap technology names last year in search of growth, most sectors weren’t invited to the party. One of the biggest laggards was health care. A big reason for the underperformance was the market’s obsession with artificial intelligence (AI). Another was the emergence of obesity drugs. To some investors, newly launched products like Ozempic came with a warning label about the potential for GLP-1 treatments to reduce the need for traditional medical care.

Because the market brushed aside health care in 2023, valuations have become relatively cheap. The S&P 500 health care sector is currently trading at 18x forward earnings estimates. Compare this to the S&P 500 information technology sector at 28x.

While technology’s growth prospects warrant it a premium price-to-earnings (P/E) ratio, the gap between tech and healthcare valuations has become hard to ignore. Especially considering the biotechnology, medical devices and pharmaceutical industries each have strong growth outlooks of their own. This may be cause to give the stagnant health care sector a fresh look heading into 2024.

Aside from value hunting, the market has taken a liking to health care stocks in recent weeks because the news flow has been bullish. Ahead of fourth quarter earnings reports, this could make these early 2024 gainers, outperformers for months to come.

What are the Nasdaq’s best performing stocks in 2024?

After Moderna, Amgen Inc. (NASDAQ:AMGN) is the Nasdaq-100’s best performing stock year-to-date (+6%). The biotech entered 2024 with positive regulatory momentum in its oncology program. On December 13, 2023, the FDA granted a priority review of Amgen’s advanced small cell lung cancer (NSCLC) candidate Tarlatamab. A day after Christmas, the company announced that a different NSCLC therapy, LUMAKRAS, will undergo a confirmatory study to reach full FDA approval by 2028.

Agmen shares have also been boosted by bullish commentary from Jeffries. Last week, the research firm raised its price target to a Street-high $345. The catalyst? The potential for Amgen to release positive data around its phase II obesity drug candidate AMG133. The stock has also attracted income investors following the board’s approval of a dividend increase that has given AMGN a 3% forward yield.

Why is Regeneron Pharmaceuticals stock going up? 

Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) has tacked on fresh gains from its 22% return of 2023. Investors reacted favorably to the biotech’s latest clinical update on Odronextamab, a lymphoma treatment that has been granted the Fast Track Designation by the FDA. Regulators are reviewing the drug as a potential treatment for multiple types of lymphoma and are expected to take action by the end of the first quarter of 2024.

At 20x this year’s projected earnings, REGN may still be one of the best values in biotech. The company’s development pipeline continues to progress, as do new indications for already-approved treatments. The stock doesn’t offer a dividend but has delivered a 29.4% annualized return over the last 15 years.

Regeneron is scheduled to report fourth quarter results on February 2nd. The stock moved significantly higher on Q3 earnings en route to reaching a new all-time high.

Will Gilead shares finally move higher?

Gilead Sciences, Inc. (NASDAQ: GILD) has gone sideways for the better part of the last five years but ended 2023 on an upswing that may have staying power. Much of the buying interest has stemmed from developments at the biotech’s Kite Pharma business, which it acquired in 2017. Last month, the FDA approved a label update for Kite’s Yescarta lymphoma therapy to include overall survival data from a Phase III study. The update is considered bullish because it is expected to elevate the drug’s profile among physicians who prescribe it. Kite’s Tecartus, a potential treatment for patients with aggressive blood cancers, has also demonstrated positive survival data at recent industry conferences.

Trading roughly $10.00 above last year’s $72.87 low, GILD has momentum — but shareholders have seen this movie before. Facing generic competition in its core HIV franchise, the stock has struggled to return to the $100 level since 2016. Although its new oncology focus is a potential growth infusion, Wall Street has mixed views. Ten analysts are bullish and nine are neutral. While a few see a 2024 run to triple-digits, the $90 consensus target implies modest gains from here.