Healthcare Stocks in a Trade War: Why Now Could Be the Time to Buy Guardant Health, Gilead, and Others

The recent U.S. tariffs on Canadian imports, including a 35% levy on healthcare goods, have sent shockwaves through the sector. The Health Care SPDR ETF (XLV) fell 1% in April 2025, underperforming broader markets amid fears of a trade war and rising regulatory pressures. Yet, beneath the headline sell-off lies a compelling opportunity: key healthcare stocks now trade at discounts to their fundamentals, offering entry points for investors willing to look past near-term noise. Companies like Guardant Health (GH), Gilead Sciences (GILD), Enovis (ENOV), and AMN Healthcare (AMN) are trading at valuations that underprice their resilience to geopolitical headwinds and their exposure to secular growth trends like AI-driven diagnostics and aging populations.

The Case for Guardant Health: A Biotech Bargain with Breakthrough Potential

Guardant Health (GH) has seen its stock drop 3.2% since the tariff announcement, yet its valuation is now deeply undervalued relative to its growth trajectory. The company's EV/Revenue ratio of 8.88 is half its historical median, despite 28% year-over-year revenue growth in Q1 2025. The catalyst? Its FDA Breakthrough-Designated Shield test, which detects eight cancers with 98.6% specificity and 75% sensitivity.

The Shield test's inclusion in the National Cancer Institute's 24,000-patient Vanguard Study could unlock Medicare coverage, accelerating adoption. Goldman Sachs estimates the test's addressable market at over $10 billion. While Guardant faces near-term losses ($384 million projected for 2025), its insider transactions—directors selling small portions of shares while acquiring stock options—signal long-term confidence. Investors should view dips below $45 as buying opportunities, with potential upside to $60+ if the Vanguard Study delivers positive interim data by late 2025.

Gilead Sciences: A High-PE Stock with Hidden Upside

Gilead (GILD) fell 3.7% on tariff fears, but its P/E ratio of 960.4 in early 2025—driven by a $0.10 EPS—now appears extreme. However, this high multiple reflects investor optimism about its pipeline, including cell therapies and oncology drugs. By July 2025, its P/E had dropped to 14.44 as earnings rebounded, suggesting a correction to more rational valuations.

Despite near-term net losses, GILD's cash reserves ($9.3 billion) and potential FDA approvals for new therapies (e.g., antivirals and Alzheimer's treatments) position it to capitalize on a sector rebound. The stock's 35% decline from its 52-week high creates a compelling entry point, especially if the broader healthcare sector stabilizes.

Enovis: A High-Volatility Play on Undervalued Medical Tech

Enovis (ENOV), a medical devices firm, plummeted 4.9% to $34.15—a 30.8% drop from its 52-week high. Yet its intrinsic value of $74.02 (per DCF/relative valuations) suggests a 54% undervaluation. While volatility (18 moves exceeding .5% in the past year) is a risk, its exposure to durable medical equipment and robotics—sectors insulated from trade tensions—offers a margin of safety.

Analysts' $59.84 average price target implies 76% upside. Investors should average into positions on dips, leveraging its 3.2% dividend yield for downside protection.

AMN Healthcare: A Staffing Bargain in a Tight Labor Market

AMN (AMN) fell 3.2% but trades at an EV/EBITDA of 46.67—far above its sector's 12.26 median. While this high multiple may deter some, the stock's 47% upside to a $33.75 fair price estimate (accounting for its Q1 revenue beat) suggests market skepticism is overdone.

The company's dominance in healthcare staffing—a sector resilient to trade wars—backs its valuation. With labor shortages persisting, AMN's pricing power in temporary nursing and allied health roles could drive margin expansion.

Risks and the Buy Signal

The trade war's inflationary pressures and regulatory uncertainty (e.g., U.S. drug price caps) remain risks. However, these are sector-wide concerns that have already been priced in. The healthcare sector's 17.6% GDP contribution ensures long-term demand, while companies like Guardant and GILD are leveraging AI and biotech to drive innovation.

Investment Thesis

The tariff-driven sell-off has created a rare opportunity to buy high-quality healthcare stocks at discounts. Guardant and Enovis offer the strongest risk-reward profiles:
- Guardant Health (GH): Buy below $45; target $60+.
- Enovis (ENOV): Accumulate at $35–$40; target $60+.
- Gilead (GILD) and AMN (AMN): Consider on further dips, with a focus on longer-term horizons.

The trade war's short-term volatility is masking a sector with robust fundamentals and secular tailwinds. For investors with a 3–5 year horizon, now is the time to position for a rebound.

This article is for informational purposes only and should not be construed as personalized investment advice.