Update 2/7/19 Mid-Day Trading : Risk Off Day
The market is trending down with all major indices in the red and the XBI $81.96 down 2.75%. We sold our position in the XBI yesterday at $83+. Array (ARRY) continues to run up at $21.60. Hot stock MacroGenics (MGNX) cooled off down 9% to $23.29.
Issues for market today: slowdown in global growth, China meeting with XI pushed out , BREXIT and shutdown looming.
Regeneron (REGN) reported Q4 growth in revenues of 22% to $1.93B. Full year GAAP diluted EPS was $21.29. Stock is flat to up at $407.
Update 2/4/19 After Close-Market Action
It was a relatively quiet day drifting upwards as buyers came in at the close. The NASDAQ was up 1.15% to the 7347 level. Tech shares led with the XLK up 1.6%. risk is back on with some optimism on a China trade deal and M&A. FANG stocks were up and AAPL a sentiment bellwether rose 2.84%.
- Biotech/life science ETFs were mixed: IBB flat at $110, FBT top 0.15% at $144.72, XBI up 0.42% at $84.34.
- Mid-caps looked good with several winners: ARNA BLUE CRSP ICPT SRPT
- Large caps not so good but BMY up 1.92% on reports that Starboard Value took a stake in the Company; and GILD down 3.64% after hours on an earnings miss due to the unfavorable impact of $0.99 per diluted share related to intangible assets (a discontinued multiple myeloma cell therapy program) acquired from Kite Pharma.
- Alexion (ALXN) down 2% on 2019 guidance despite a beat of 7% on revenues and diluted EPS of $2.14 ahead of estimates of $1.82.
Life Science ETFs Soared in January 2019
Small and Mid-Cap Biopharmas Lead the Way
Life Science ETFs took off in January along with everything else after a disastrous Q4 2018. If you jumped into the S&P 500 (SPY) on Jan 3 you are up 10.4% in 2019. Many life science stocks peaked around 9/24/18 but the IBB lagged over 5 years peaking around 7/14/15. The bottom for most of these ETFs was early February 2016. Over the long-term Life Science ETFs outperformed the S&P 500.
How Did the FBT Outperform?
The (FBT) was less concentrated in the large cap names and more diversified with top holdings: EXEL IONS ICPT ILMN and AMGN.
Here is the ETF performance for the top biotech ETFs for one month and 1 year:
- The First Trust NYSE (FBT) is up 16.5% closing at $144.50; 1 yr 8.5%.
- The SPDR S&P Biotech (XBI) is up 15.3% closing at $83.99; 1 yr (4.52%)
- The iShares (IBB) is up 13.1%, closing at $110.27; 1 yr 2.95%
NASDAQ stocks outperformed other major indices up 9% with the heavy technology weighted NASDAQ-100 (QQQ) up 8.1% closing at 167.45. The DOW also did well up 7.4%
Here are two previous posts on ETFs we did : In 2018 the FBT was also the leader and in 2015 we showed that the Life Science ETFs outperformed the Mutual Funds in the sector with the XBI as the leader.
Fidelity Select Biotechnology (FBIOX) up 13.36% YTD at $20.11 but down 8% over one year and is tracking the IBB because of overweighting of well known large caps. Top holdings include : AMGN, GILD, BIIB,ALXN and REGN. Other major holdings include CELG, VRTX, NBIX , SRPT and IONS. The overall Morningstar Rating is a low 2 Star despite the Fund being up 10.65% over 3 year. AMGN hurt the performance down 1% YTD. Two attractive Fidelity healthcare funds the outperformed over the past year are FSMEX and FSPHX.
The T.Rowe Price Health Sciences Fund (PRHSX) is another option for Life Science investing. The Fund is up 11.68% in 2019 and 4.12% for one year. The Fund is highly diversified in healthcare with top holdings: UNH ISRG BDX VRTX and ANTM. The Fund is overweight providers such as Anthem and United Health.
Disclosure: Long FBIOX GILD XBI