ANALYSTS’ price targets on Chinese health care stocks are looking optimistic after a selloff in the sector accelerated toward the end of last year.

The average 12-month target on drugmakers is 36 percent higher than their share price, according to data compiled as of Wednesday last week. That’s close to the biggest gap since 2011 and the widest among all sectors on the MSCI China Index.

The disparity grew in December, when US$46 billion was wiped from health care stocks as China changed its drug procurement policy in a bid to drive down prices. A sector subgauge on the CSI 300 Index slid 15 percent, its biggest monthly loss in nearly three years. Drugmakers were already under pressure at that stage, rocked by a vaccine scandal that derailed a rally midway through 2018.

Analysts have tweaked their targets, but they’re still lofty. The sector was, after all, delivering stellar returns less than a year ago as the U.S.-China trade dispute erupted and the wider market fell.

Health care stocks — defensive in nature — climbed to record highs, with the CSI 300 health care index jumping 26 percent from January through May. Most other subgauges declined.

CSPC Pharmaceutical Group Ltd. was a top performer in Hong Kong, surging 56 percent in the first five months of the year.

At least eight brokers raised their price targets on the firm in late May after its quarterly profit beat expectations, citing everything from a strong product pipeline to inclusion on the Hang Seng Index. The stock went on to lose 54 percent over the rest of the year. It has bounced back in recent days.

Among analysts tracked by Bloomberg, 33 still have buy or equivalent ratings on CSPC Pharmaceutical, while only two rate it hold and two recommend sell.

The CSI 300 health care index, which slid 38 percent in the second half of last year, was the worst performing subgauge Thursday, falling 0.6 percent while the CSI 300 Index was little changed. (SD-Agencies)