Biotech At Risk: Take a Little Off Speculative Stocks

Biotechnology remains one of the strongest sectors of 2012 especially earnings driven, large cap stocks all doing well today: Amgen (AMGN $88.4) up 1%, Biogen (BIIB $142.6) up 0.4% and  Gilead (GILD $68.85) up 6%. Biogen Idec earnings are due tomorrow.

See summary below of 2012 big winners which are vulnerable due to momentum investors.  Based on mid-day trading here is where they are today :

Alexion (ALXN $98.7)  Broke 100 and upward channel next support at $95. Weak today on earnings.

Medivation (MDVN $53.5) At edge of channel but still solid with support at 50. Revenues in focus going forward.

Regeneron (REGN $159) Solid mid channel performer. Up 4.8% today.

Pharmacyclics (PCYC $62.4) Broke channel, double top, support at $60.

The major ETFs are flat to up today: IBB and XBI. Speculative mid-cap stocks are flat to weak. The QQQ is right at support of $65.

Led By Apple (AAPL) and Google (GOOG) NASDAQ Is Down 5.37% in One Month

Up until now biotechnology stocks have stayed above the flak of market volatility as mutual fund accumulation (Fidelity Select Biotech FBIOX) combined with hedge fund specialists have driven the sector to new highs. However, over the past five days some big movers have dropped out of their upward channel.

The bellwether ETF iShares Nasdaq Biotechnology (IBB) is off its 52 week high of $148.54 down to $138.50 near the peak of the July rally. Another ETF the SPDR S&P Biotech (XBI) and is almost 8% off its 52 week high to $89.15 and up 34% YTD.

Here are four biopharmaceutical stocks that are big winners in 2012 and have recently been hit by a little  profit taking:

Company                                           Market Cap $                  Est. 2012 Revenues $         EPS  $                 YTD % appreciation

Alexion (ALXN $104.36)                 20.6B                                1.13B                                      1.90                       46

Medivation (MDVN $52.51)            3.87B                               150.3M                                 (0.61)                    128

Pharmacyclics (PCYC $61 )              4.24B                               132.8M                                  0.33                      313

Regeneron (REGN $158)                  15.2B                                 1.25B                                      2.71                      185

The traditional financial analyst may find these valuation metrics too high but one needs to take into account the M&A premium, a limited supply of quality large cap stocks and the clinical pipeline of potential new products.

Mid-cap biotechs are being hit much harder with a red screen today and our index down 1.4%. Amgen (AMGN) and Biogen (BIIB) are less volatile,  trading more like large cap pharma stocks.

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