Large Cap Biopharmaceuticals -Valuations and Earnings Potential

 Large Cap Biotechs Hover Near January 2014 Highs

IBB At $254 on 2/11/14

The biotechnology sector has come roaring back after a 5-7% correction in February. Only one stock is at a new high Alexion (ALXN $171) . Many speculative mid and small caps are doing slightly better if we look at the proxy ETF XBI ($153.85) up 18% YTD,  but the volatility is much greater as XBI was 13% off its January highs on 2/4/14.XBI has many small cap momentum stocks at “equal weight” or about a 2% holding  The biotech action in 2014 has been a little choppy with two mini-corrections after a torrid pace in January. We are near the 2014 tops for most large cap stocks so the technicals will show us how much firepower is left to drive to new highs. From the data below here are some comments:

  1. Alexion (ALXN) hit a new high this week but Biogen Idec (BIIB) and Gilead (GILD) are within 3% of all time highs.
  2. Abbvie (ABBV) and Bristol Myers (BMY)  should now be viewed as biopharmaceutical stocks because of their R&D capabilities and pipelines. Both pay a dividend.
  3. The most expensive stocks based on these metrics are Alexion (ALXN)and Regeneron (REGN)  (up 6% today) based on Price/Sales and forward PE.  Regeneron has a strong R&D partnership with Sanofi with 20% stock ownership so downside for financial performance should be mitigated.
  4. Amgen (AMGN) offers good value, a strong pipeline with clinical milestones in 2014 and appears to have made an excellent deal for Onyx Pharmaceuticals at $10B. Dividend is 2.1%.
  5. Celgene (CELG) stock has been a laggard but the stock has put in a bottom in the $150 range.

Five of these stocks have been in the Rayno Biopharmaceutical focus list for five years.

ALXN, AMGN, BIIB, GILD and REGN.

Widely Held Large Cap Biopharma Stocks

Company Ticker Price Market 2014 Rev P/S F P/E PEG B/Sh Stock 1 yr. 52 wk
Cap est $B est %YTD %Up High
Abbvie ABBV 49.5 78.6 19 4.14 13.73 1.42 2.22 -6 36.7 54.8
Bristol Myers BMY 52 82.9 15.75 5.26 29.8 2.42 8.95 -2.1 40.7 56.8
Alexion ALXN 170 33.4 2 16.5 33 4.73 12.13 28 81.6 171
Amgen AMGN 120 90.8 19.6 4.6 14.6 2.52 29.3 5.45 38.6 124.5
Biogen Idec BIIB 318 75.1 8.55 8.78 22.9 2.23 36.5 13.7 93.4 321.2
Celgene CELG 157 64.5 7.6 8.5 16.3 1.92 14.3 -7.3 56.4 174.7
Gilead GILD 81 124.2 16 7.75 14.5 1.27 7.1 7.8 98 84.4
Regeneron REGN 304 29.9 2.6 11.5 57.1 1.37 17.2 10.4 83.3 319.8

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