Update-3 12/17…10:51 EDT Good day for a pivot up? Nibbled on some IBB and XBI. Our top large cap pick VRTX continue to run. NAZ up now 0.22%.Volatility rules.
Update-2…Powell transitions FED talk through pivot with 2x taper. Potential for 3 rate hikes in 2022 soothes inflation hawks. Market rallied over 1%, NASDAQ almost 2%. TECHS rally big.
Update-1…12/15/1:30p Omicron concerns drive investors to defensive sectors like healthcare. Stocks wavering on FED Meeting. JPMorgan’s big Healthcare Meeting for January movedt to virtual setting due to spreading omicron variant.
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- Large cap biopharma up: MRK,PFE,RHHBY. LLY up 9% on financial and clinical update.
- Regeneron down 2.8% on Bernstein downgrade.
- Vaccines mixed Dx players up: ABT, HOLX, QDEL
- VIR soars 11% on UK antibody treatment approval.
- XLV up 0.86% to $136. Near breakout to new highs.
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Biotech Playbook 2021: No Help from Small Caps in Q4
In case you missed February 2021 that was the peak of most small cap biotech stocks in 2021.Today we had a good catalyst, the $6.75B acquisition of Arena Pharmaceuticals by Pfizer. The deal was at a 100% premium. We have written about possible catalysts for the biotech sector in the past but not today as the equal weight XBI gained little traction up only 1.15% but on above average volume, The 52 week low is around the $106 level compared to a 52 week high at a $174 handle. The large cap weighted IBB did a little better up 1.68% close to the $150 level. Clearly the sentiment for speculative small caps has waned.
Another small cap speculative ETF the ARK Genomic Revolution (ARKG) saw good trading volume but the result was flat at $60.52.
Our mid-cap focus stock picks have done better today but are way off their 2021 highs: CRSP, CYRX, QDEL,VCYT. Cryoport and Veracyte are still up and look better technically. Quidel was up 5.48% today on Omicron concerns globally but the stock has been choppy over the past month because of increased competition in the infectious disease diagnostics area.
So we are left with our primary core portfolio picks Large Cap Biopharmaceuticals all of which have large cash positions for M&A and pay dividends. Our top picks have been Abbvie (ABBV), Regeneron (REGN), Pfizer (PFE), Roche ADR (RHHBY) and recently Vertex Pharmaceuticals(VRTX). Bristol Myers Squibb(BMY) near the bottom of its 52 week range can be a good dividend play.