Update-4…1/6/23...Broad rally sparked by latest economic data anticipating weaker economy and slowing wage growth . Bond yields are down. A ‘”soft landing ‘”scenario?
We are at the JPMorgan Healthcare Conference next week.
Closing trades:
XLV at $135.67, IBB at $133.14, XBI at $83.16
============
Update-3 …1/4/23..Biotech stocks rallied despite a FED pushback. A nascent rally stalled after the FED minutes were published and re-iterated to continued r
ate hikes. Inflation risk is still a concern. Nonetheless the more speculative small cap biotechs gained momentum: KALA up 37% on FDA news ,GERN up 31% on Phase 3 trial. Also among our holdings former high flyers did well maybe in anticipation of the JPMorgan Healthcare Conference next week:CYRX, CRSP, QDEL, MRTX, PACB, VCYT.
*While today’s action is speculative it indicates traders have the appetite for risk. And many of these companies have a good following among specialized biotech investors. Presumably these emerging companies are not entangled in the MACRO concerns if they have a strong balance sheet.
- The XBI gained ground up about 2% to the $83 level.
- ARKG was up 3.77% to $28 level, the IBB was up 1.28% at $131.71
- UNH lost over 2% for second day but holding above $500.
- Large cap biopharmas held green.
- New large cap pick Abbott Laboratories (ABT) at $111. PE of 25, P/S of 4.11, analyst at 2.11.
=========
Update-2…1/3/23. A choppy day with some sector re-balancing with energy very weak down 3.51% and technology down almost 1%. Financials and RE come back into green. Healthcare down 0.59%. But looking at our model below here is what happened today:
- UNH was down 2.285 teetering on the base of the uptrend line at $519.
- JNJ was up 0.87% at $178 a strong hold.
- The XBI was weak down 1.77% but held above te $80 level; the IBB was flattish down 0.95% at $130.
- Large cap biopharmas were mixed with ABBV, AZN, BMY marginally green.
- Mid-caps were weak but MRTX found interest at $46.65.
- A lot of COVID in the news with the XBB variant but MRNA and BNTX are flat.
- No comment on small cap growth until JPM Conference.
=====
Update-1… 1/2/23 Better trading days lie ahead. Biotech stocks held up nicely in last trading days as the XBI popped last Thursday to $83 level . Many of our small cap spec stocks took off as well. Healthcare (XLV) was flat last week and down 4% over past year beating the SPY down over 19% YTD. Follow the tape and news in biotech because you will get little help for MACRO.
Large cap biopharma stocks have been outstanding in 2022 and are fairly valued. Many mid caps rallied last week despite a flat IBB.
January can be good trading for small cap biotech especially after a mediocre year. among the catalysts are the JPMorgan Healthcare Conference with many satellite confabs, 2022 earnings and 2023 guidance, and M&A .
Choppy pattern with bullish under-pinnings. MedTech is picking up (IHI).
========
Healthcare Portfolio Is Doing Well, Biotech Not So Much
- FED and Rising Rates cast a pall on investors, Macro Rules.
- Strategists piling on healthcare stocks?
- Pivotal bond data in January with earnings and recession watch.
If you have been reading our reports over the past two years your stock portfolio should have beaten the market. Our top picks are United Health (UNH) up 4.29% YTD and 135.7% over 5 years, Merck (MRK) is up 42.46% YTD with good momentum lately, and our top large cap biopharma picks having all done well but lately have been hit with PE compression. But PEs remain at lower end in mid teens with dividends . Still near 52 week highs are : GILD, LLY, MRK,REGN and we still like ABBV and VRTX despite the recent volatility. BMY is the weakest among our holdings and is a bit overvalued with a PE of 24 and weak momentum lately. Here are some financial metrics as we approach Q4 and 2022 final large cap biopharma earnings in January.
One concern we have is that many strategists favor the healthcare sector in 2023. The reason given is the defensive nature of the sector with more predictable biopharma earnings and robust product pipelines. And with strong balance sheets large caps have the ability to do M&A to strengthen product portfolios.
The biotech sector has not done well in 2022 despite some strong runs. Small and mid cap stocks are more “risk-off’ with interest rates rising and sentiment waning. The Russell 200 (IWM) is off 22% YTD but the biotech smaller cap XBI is down 27% with momentum waning. The technicals on the XBI in 2022 do not look good with three tries at the $95 level falling below $80 again today.
Today Madrigal Pharmaceuticals (MGDL) soared 249% on positive Phase 3 clinical data for NASH and liver disease. Norm,aally this kind of positive result would spark interest in the sector. But both the IBB and XBI were down.
So the play in 2023 will be stock picking not so easy with the sector looking weak. also we will look at MedTech and Tools for new picks after earnings.
Another loser day, Don’ Fight the FED!
Long ABBV,BMY, MRK, RHHBY, PRHSX,REGN, UNH,XBI
| Model | ||||||||||||
| PORTFOLIO | ||||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | 2022 | |||||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | 1 year | YTD | 30d | Price | 5 days | ||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | % Perf | %Perf | %Perf | 12/16 | % Perf | |||
| iShares NAZ Bio | IBB* | 136 | 15 | 151.5 | 25.7 | 152.62 | -11.56 | -12.86 | -0.9 | 133 | – | |
| iShares Russell 2k | IWM | 163 | 5 | 196.4 | 18.3 | 222.45 | \17.86 | -21.61 | -5.36 | 174.37 | -2.38 | |
| Merck* | MRK | 80 | 10 | 81.77 | -10 | 76.64 | 43.85 | 42.48 | 9.28 | 109.2 | 0.39 | |
| United Health | UNH | 330 | 25 | 350.7 | 27.19 | 502 | 20.68 | 4.29 | 2.38 | 523.7 | -2.87 | |
| SPDR S&P Bio | XBI | 117 | 10 | 140.8 | 48 | 111.96 | -36.34 | -27.69 | -0.65 | 80.96 | 1.86 | |
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | -3.51 | -3.89 | 1.89 | 135.53 | -1.78 | |
| T.Rowe Hlth Sci | PRHSX | n/a | 5 | 99.65 | n/a | 104 | -23.47 | -13.61 | -0.72 | 89.83 | -5 | |
| iShares U.S MedT | IHI | 50 | 5 | 54.83 | 65.85 | -25.91 | -21.49 | -0.43 | 51.7 | -2.27 | ||
| Tracking Comp | COMP | |||||||||||
| * | ||||||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | -60.55 | -50.75 | -10.37 | 30.16 | -0.63 | ||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | -33.57 | -16.92 | 2.26 | 16.27 | – | ||||
| FiIDO MEDtech | FSMEX | 76.15 | 83.18 | -33.96 | -26.8 | 0.59 | 60.89 | -2.6 | ||||
| DOW | DIA | 310 | 363.32 | \(12.6) | -9.45 | -2.11 | 328.97 | -1.91 | ||||
| S&P 500 | SPY | 379 | 475 | -17.48 | -19.3 | -3.08 | 383.27 | -2.55 | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | -27 | -31.07 | -3.92 | 274.25 | -2.76 | ||||
| Top Biopharmas | ||||||||||||
| n/a | ||||||||||||
| Abbvie | ABBV | 35.22 | 18.52 | 5.67 | 160.48 | -1.58 | ||||||
| Bristol Myers Sq | BMY | 24.91 | 17.87 | -3.49 | 73.49 | -6.77 | ||||||
| Eli Lilly | LLY | 41.3 | 30.28 | 1.97 | 359.87 | -0.31 | ||||||
| Merck | MRK | 17.86 | 42.48 | 9.28 | 109.2 | 0.39 | ||||||
| Regeneron | REGN | 25.39 | 14.47 | -1.7 | 723.17 | -3.59 | ||||||
| Vertex | VRTX | 60.35 | 38.8 | -0.21 | 304.8 | -2.38 | ||||||