NEW YORK - Small and midcap healthcare stocks were standout performers on improved earnings outlooks, helping major U.S. small-stock indexes outperform on Monday.
The S&P SmallCap Healthcare index .6GSPA climbed 1.3 percent, boosted by Salix Pharmaceuticals Ltd, which said its rifaximin drug to treat irritable bowel syndrome met the main goal of two late-stage trials. Shares rose more than 51 percent to $20.26.
Natus Medical Inc, up 6.7 percent to $15.66, also helped lift the small-cap healthcare names after the medical device maker said it would buy privately held Alpine Biomed Holdings Corp. The company said it expects to return to revenue and earnings growth shown prior to the economic slowdown by 2010.
There are some pretty good fundamentals out there for a number of these stocks, and we are going to see some real growth in revenue, said Edward Hemmelgarn, founder and chief investment officer at Shaker Investments in Cleveland.
Both the S&P MidCap 400 .MID index and the S&P SmallCap 600 .SML gained 0.4 percent. The S&P 500, by contrast, was up just 0.1 percent.
Midcap healthcare stocks such as hospital operators Health Management Associates Inc, up 6.7 percent to $7.99, and Community Health Systems Inc, up 5.9 percent to $34.25, moved higher after large-cap counterpart Tenet Healthcare Corp boosted its full-year profit forecast, citing a stronger-than-expected performance over the summer.
The S&P MidCap Healthcare index .4GSPA gained 0.9 percent.
Since hitting 12-year lows on March 9, the S&P MidCap 400 index has risen more than 68 percent, while the SmallCap 600 has climbed more than 72 percent, outpacing the 54 percent gain for the large-cap S&P 500 .SPX.
The small-cap index saw its five-day winning streak snapped on Friday, while the midcap index is currently on pace for its seventh consecutive session of gains. (Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)