The pandemic has upended the business of daycare and fertility benefits. Some expect, though, the drag on growth will prove short-lived in the face of longer-lasting trends.
That’s kept some investors bullish on prospects for companies like daycare giant Bright Horizons Family Solutions Inc. and fertility benefits provider Progyny Inc.
Both companies have underperformed benchmark indexes so far this year. Shares in Bright Horizons are down about 4.9% in 2021 versus a gain of about 9% for the S&P 500. And while Progyny shares are up about 8%, they lag behind a roughly 13.5% gain for the Russell 2000.
This reflects the impact of the pandemic and economic downturn. Job loss and economic strain amid a global pandemic appears to have postponed some people’s decision to have children, while others have left the workforce to care for their kids. As a result of the pandemic, 300,000 fewer babies would be born in the U.S. in 2021 compared with last year, according to an estimate from the Brookings Institution.
“Some women who wanted to become mothers were facing a lot more unknowns last year because of the pandemic,” said Stephanie Davis, analyst at SVB Leerink, who nonetheless has a buy rating on Progyny.