Update-2… 1/31… Good value in Pfizer (PFE) as stock near new lows with PE of 8.26 stock at $43.50. but nobody cares as boom times for COVID vaccines end.Provides Full-Year 2023 Revenue Guidance(4) of $67.0 to $71.0 Billion and Adjusted Diluted EPS(3) Guidance of $3.25 to $3.45. Looking for a reset with RSV vaccine and Paxlovid. Dividend at 3.77%.

Updates ..1/25..Abbott (ABT) reports full 2022 year sales growth  of 1.3% of $43.7B with GAAP dilute EPS of $3.91. Revenues hit by decline in COVID-19 sales decline and manufacturing disruptions with U.S. Infant Formula. Projects high single digit revenue growth for 2023 with bright spot FreeStyle Libre continuous glucose monitoring system. Medical device sales weak in China caused by COVID-19 curbs. Stock trades down to $110.44 level mid-day.

Update.1/24....Danaher (DHR) tops estimates with full year 2022 revenue increase of 7% to $31.5 B and  $9.66 EPS a 13.5% increase YoY.Core revenue for 2023 to grow mid- high single digits. Stock was down1.96% to $271.58 at close.

Intuitive surgical (ISRG) fell 9.1% after hours to $234.50 with a miss, cites COVID disruptions in China. Installed base WW grew 12% to 7544 systems. Narrowly missed Q4 profit.

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Healthcare Sector Is Lagging in 2023

  • Small Cap Biotech has momentum but large cap biopharma lags.
  • Technology and Semiconductors lead the market in 2023.
  • Upcoming earnings could be pivotal

We are in the ” foggy zone” between #JPM23 and earnings season so it is hard to forecast healthcare and biotech stocks performance. We can gauge technicals and trade major life science ETFs.The healthcare sector is perceived as defensive but in 2023 there is more investor appetite for risk based on the QQQs comeback and the XBI strength. Healthcare lags in 2023 while semiconductors are hot with the SMH is up 15% YTD.

The market is still clouded by the FED’s determination to raise rates and keep money tight. The next FED Meeting is in February and expectations are for a 0.25% rate increase. In the meantime many economists and strategists are expecting a mild recession. Earnings and guidance will be telling

Here are some trends to watch based on the data and recent trading.

  1. Based on my trades and other momentum indicators- ARKG, XBI- the small cap rally should continue through January.
  2. Large cap biopharma sold off from #JPM23 week. That is expected since they led through-out 2022.
  3. MedTech sector is improving: FSMEX,IHI.
  4. The IBB looks better than the XLV for non-traders.
  5. Key Earnings and guidance to watch over next 2 weeks:  DHR 1/24, ABT1/25, TMO 2/1, HOLX 2/1, BDX 2/2, ILMN 2/7, MRNA 2/22, large cap biopharmas on 2/2, VRTX 2/7,
  6. Two large cap biopharma stocks are included in the Investors Business Daily IBD Big Cap 20 rankings: #1 Vertex Pharmaceuticals (VRTX) and #4  BioMarin Pharmaceutical (BMRN).

Disclosure: long ABT, ABBV,  IWM, IHI, MRK, PRHSX, UNH, VRTX, XBI.

Model
PORTFOLIO
2020 2020 2020 2021 2022 2023
Stock/ETF Ticker Price Wgt Price Price P 1Y Price YTD
10/25 % 12/31 % Perf 12/31/21 12/31/22 %Perf 1/22 % Perf
iShares NAZ Bio IBB* 136 15 151.5 25.7 152.62 130.55 3.69 135.47 3.18
iShares Russell 2k IWM 163 10 196.4 18.3 222.45 174.36 -7.83 185 6.13
Merck* MRK 80 10 81.77 -10 76.64 110.81 36.15 109.94 -0.91
United Health UNH 330 20 350.7 27.19 502 530.27 5.12 486,72 -8.2
SPDR S&P Bio XBI 117 10 140.8 48 111.96 83 -5.41 86.99 4.81
Healthcare SPDR XLV 108 25 113.4 14.71 140.89 135.88 2.39 133.91 -1.43
T.Rowe Hlth Sci PRHSX n/a 5 99.65 n/a 104 89 -0.81 90.15 0.37
iShares U.S MedT IHI 50 5 54.83 65.85 52.57 -8.86 54.54 3.75
MedTech* ABT new 5 123.5 127.46 109.83 -9.53 112.82 2.76
Tracking Comp
ARK Genomic ARKG 93.26 61.24 28.23 -31.97 32.49 15.09
Direx3X Bull LABU 7.66 -58.91 7.84 10.89
FIDO Biotech FBIOX 25.18 19.35 16.04 4.21 16.57 1.78
FIDO MEDtech FSMEX 76.15 83.18 61.58 -10.39 64.28 4.38
DOW DIA 310 363.32 331.34 -3.93 333.67 0.71
S&P 500 SPY 379 475 382.41 -11.39 395.88 3.52
NASDAQ-100 QQQ 315 397.85 266.33 -21.85 282.68 6.16
Top Biopharmas
Abbvie ABBV 161.64 12.45 149.59 -7.44
Bristol Myers Sq BMY 71.58 14.82 74.15 3.06
Gilead Sci GILD 85.39 22.42 83.01 (3.31)
Eli Lilly LLY 362.94 42.34 346.07 -5.4
Merck MRK 110.94 36.15 109.94 -0.91
Regeneron REGN 721.7 17.52 722 0
Vertex VRTX 288.78 35.53 309.84 7.29

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