10/4 Update-1 Treasury Yields Drop Sparking Broad rally
Check SMID biotech stocks for year-end rally as tape looks much better. Taking heads warn “its another bear market rally.”
- 5 Yr Treasury Yield drops 1.11% to 3.84%, 10 Yr to 3.617 %.
- Broad rally brings all indices up with S&P 500 up 3.06% to 3790, NAZ up 3.34% to 11,176.
- Leading sectors: ENERGY, FINANCIALS all up >3%, healthcare up 2.32%. materials up 3.675.Watch for transition to cyclicals.
- IWM up 3.96% to $176, XBI up 3.78% to $83 portending strength in small caps.IBB up 2.86% to 122.65.
- Large caps all green: GILD up 4.8%, RHHBY up 4.84% on news and dollar weakness?
10/5 1p EDT hot stocks Dept: Illumina (ILMN) up again today 4.85% to $215 handle following SVB and Evercore upgrades and after Company Forum on sequencing innovations.
Large Cap Biopharmaceuticals: Pick some Core Holdings for Your Portfolio
Now that some clarity is apparent for drug pricing legislation you should have a few large cap biopharmaceutical stocks in your portfolio. Large cap biotech provide value, growth and dividends with some protection from MACRO volatility. Biotech is a play on innovation in an era of molecular medicine.
Here are some general takeaways:
- Top winners YTD among stocks we hold in our portfolio are: VRTX LLY BMY MRK REGN all easily out -performing the IBB down over 23% YTD. Note upgrades LLY, MRK, REGN and VRTX.
- Biogen (BIIB) soared up 35% MTD and now up 10% YTD on Alzheimers drug clinical study results. partnered with Eisai. Monoclonal antibody technology targeting amyloid in the brain.
- Biopharmas are off their August highs because of a few downgrades: ABBV, AZN. BMY, and the general market weakness in September.
- Valuations still look reasonable compared to other sectors. Price to Sales ratio genially under 5 with Forward PEs in the teens. However we’ll need Q3 earnings and guidance to confirm these numbers.
- Gilead Sciences (GILD) is a laggard down 15% but has a FWD PE of 8.6 and a PE of 18.8. Dividend Yield is an attractive 4.73%
- The large cap biotech sector is slightly more volatile lately be sure to monitor the news and moving averages like the 200 day and 50 day. The gap between winners and losers is greater as well.
- LLY is one of the most expensive stocks in the group because of high expectations of potential blockbuster drugs like Mounjaro.
- The strong tape of selective SMID stocks suggest a rally in Q4 triggered by M&A.
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*acquired by AZN
*acquired by BMY