Update #2 Large Cap Biopharmaceuticals: ABBV, ALXN, BMY, CELG

Abbvie (ABBV) Reported Better than Expected Earnings and Revenues

Worldwide GAAP revenues were $6.538B up 10.1% with Global Humira sales up 15.1% and Q1 IMBRUVICA sales of $551M. Full Year 2017 outlook for EPS was confirmed at $5.44-5.54. Stock closed up 1.55% today to $66.05.

Alexion (ALXN) Topped Earnings and Revenue Forecasts for Q1.

GAAP diluted EPS was $0.71  topped $0.41 for previous . Revenues of $870M up 24% compared to QtQ 2016. Rare disease products for metabolic and complement grew double digits. Stock closed up 5.12% at close to $126.91. 

Bristol-Myers (BMY) Beats on Q1 Raises Guidance

Sales were higher for cancer drugs Opdivo and Yervoy and blood thinner Eliquis. Opdivo immunotherapy drug sales rose 60% to $1.13B.Total revenues for Q1 were up 12% to $4.929B. EPS was $0.94 compared to $0.71 QtQ 2016. BMY was up 3.53% at close to $55.67.

Celgene (CELG) Q1 Misses but Psoriasis Drug Expected to Rebound

Total Revenues were up 18% to $2.96B short of analysts forecast of $3.03B. EPS beat  forecast of $1.16. Revlimid sales were up 20% to $1.88B. Otezla sales were $242M up 24% QtQ. Total Revenue guidance for 2017 was unchanged at $13 to $13.4B. Stock closed down 0.98% today to $123.97.

IBB was flat at $296.52. XBI was up 0.91% to $71.19.


Update #1 Amgen Misses on Revs: Enbrel Weighs on Revenues; Profits Top Estimates $3.15 vs $3.00 est

Total revenues declined by 1% to $5.5B due to weak Enbrel sales. GAAP EPS increased to $2.79 driven by higher operating margins due to lower costs.Non-GAAP increased 9% to $3.15. Enbrel arthritis and psoriasis sales decreased by 15% due to competition and lower segment growth. AMGN was down after hours.AMGN was down today 1.15% to $162.72.


Biotechs Running Again: Rayno Life Science Picks

XBI up 19.2% YTD

Q1 Earnings Can Pivot Sector: Biogen Up Today on Earnings and Revenue Beat 

Biotechs are running again taking the cue from NASDAQ which is up 3.44% in April after a brief mid-month sell-off. Biotech stocks rallied from global macro concerns which has dampened investor enthusiasm over the past two months. Political risks overwhelmed sentiment last week with the Trump agenda delayed, North Korea war talk, and the persistent malaise in Syria and the Middle East. But with Emmanuel Macron, a centrist candidate winning the first round of the French Presidential election investors found a way out of the gloom and bought stocks and sold gold with risk back on.

The biotech sector had a rocky ride in April briefly touching below 60 day SMA support levels at mid-month but now is trying to get closer to mid-March highs. So we are stuck in a trading range since the end of February with strong support of the IBB at about $287 and strong resistance above $300. We had two attempts at a breakout above $300 in March.The healthcare sector overall (XLV) is still up 8.4% YTD despite negative opinions about drug pricing and loss of patients for “repeal and replace” the ACA.

The Rayno Biopharmaceutical Portfolio performance was outstanding on  a year to date basis and since inception.

Top winners since inception are:

bluebird Bio (BLUE) up 103%, Foundation Medicine (FMI) up 68% and Abbvie (ABBV) up 16%. We also called timely trades in two major ETFs the IBB and XBI which beat the overall market.

Top Losers since inception are primarily large cap biopharmaceuticals which have lagged the biotech market:

Gilead Sciences (GILD) down 20.9%, Bristol Myers-Squibb (BMY) down 7.7% and Amgen (AMGN) down 4%. But all three stocks are recovering in 2017.

Disclosure: long ABBV, BMY, FBIOX, FMI, GILD, RHHBY, QQQ

Company Ticker Date Price Price Perf YTD
Started 4/25 % %
Abbvie ABBV 2/3/16 56.5 65.45 16 4
Amgen AMGN 9/12/16 172 165 -4 12.65
Biogen BIIB 2/13/17 275 286.5 4.5 1.17
bluebird bio BLUE 2/3/16 43.75 88.1 103 42.22
Bristol Myers BMY 2/16/16 61 54.2 -7.7 -6.6
Foundation Med FMI 7/5/16 20.4 34 68 88.98
Gilead Sci GILD 2/3/16 85.8 67.3 -20.9 -6.27
Roche ADR RHHBY 4/4/16 30.36 32.4 7.9 13.59
IBB 6/29/16 250 296 18.4 11.37
XBI 1/31/17 64 70.7 9.4 19.24
QQQ n/a 135.13 n/a 14

Here are some takeaways and trends to consider:

  1. Based on five years of data, ETFs can be a safer way to invest in the sector compared to randomly picking stocks. The Fidelity Select Biotechnology Portfolio (FBIOX) is also a good pick and is also outperforming the IBB YTD by 3 percentage points.
  2. The Rayno Biopharmaceutical Portfolio outperformed the ETFs if you bought all stocks in the portfolio. But you had to buy both ETFs or just the XBI.
  3. Large caps lag the market because of slower revenue and earnings growth. We shall better calibrate the market after all Q1 earnings are in beginning next week. The XBI has smaller cap weighting than the IBB and has more M&A potential among the stocks.
  4. We are still in a long-term recovery mode from a bear market and “bio-bubble” that began with a vicious sell-off in July 2015.
  5. Hold all core positions including ETFs but the caveat is the NASDAQ-100 (QQQ) should track. Drug pricing concerns remain and can cause a sell-off if newsworthy or if top line revenues are impacted.
  6. No trend just a trading range.



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