April Is Busting Out For Healthcare and Biotech… Update-3…MedTech

Apr 10, 2023 | 2023-24 Life Science Portfolios, Biopharmaceuticals

4/19/23 1:30 P EDT…Update-3..Added to MedTech weighting in healthcare portfolios: ABT,HOLX, IHI.  

  • Talc liabilities weighing on JNJ shares, but sales growth up 5.6%, MedTech bright spot up 7.3%.
  • Abbott (ABT) soars over 7% to $112 level on earnings with recovery in device sales increases outlook.; COVID Dx sales down but single digit growth intact. In March, Abbott’s market-leading FreeStyle Libre® continuous glucose monitoring system received U.S. FDA clearance for integration with automated insulin delivery systems. Abbott is partnering with leading insulin pump manufacturers to integrate their systems with FreeStyle Libre 2 and FreeStyle Libre 3 as soon as possible.
  • U.S. Medical Device ETF (IHI) up 2.90% to $56.80.

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Financials strong because of large banks XLF up 2.78% to $32.88. Other sector leaders: Energy 2.47%, Materials 1.62%. NASDAQ eases flat. Merck (MRK) strengthens immunology pipeline with $10.8 M acquisition of Prometheus (RXDX).

  • United Health (UNH) raises outlook and beats despite rising costs. Stock is flat for the week after falling 2.74% on earnings Friday. investors are still worried about rising cost and policy changes for government backed health insurance programs. UNH remains a core holding with healthcare an overweight. REVs up 15% YoY to $91.5B led by Optum Health. Guidance for full year revs are between $23.25-$23.75B.
  • Quidel/Ortho (QDEL) up 4.5% to $94.16 on preliminary revenue results of $840-850M.
  • XLV up 0.79% to $134.57 over last week.
  • XBI up 1.72% to $78.19 but hits a wall of resistance at $80.
  • IBB up 1.05%  to $132.43. Still good value in large cap biopharma with many leaders: ABBv, AZN, MRK, REGN, VRTX etc,
  • IHI iShares U.S Medical Devices up 1.62% to $55.15 up 4.9% YTD.

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4/13…2P EDT Biotechs join rally as investors seek innovation and growth.

  • Gene therapy upgrades: CRSP, NTLA 10% + movers.
  • Momentum returning to SMID caps: CYRX, PACB, VCYT.
  • XBI up almost 5% to $79-we sold at $80 previously.
  • IBB up 2.345 to $133.62.
  • Review our SMID Life Science Trading Portfolio.

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April is Busting Out for Biotech and Healthcare

  • Another sector rotation favoring healthcare, energy and precious metals. Consumer discretionary, Industrials and small caps lag.
  • Small caps and speculative biotechs lag. No momentum.
  • MACRO headwinds ease but no FED rate cuts expected near term.

Last week was a good week for healthcare stocks and most large cap biopharmaceutical stocks resumed an upward trend. Here is where we were at our last Healthcare Portfolio update at the end of March. What has changed is that investors are investors are more concerned about a slowing economy or even stagflation and seek growth with a defensive posture. The big movers after the banks collapsed were large cap techs with the QQQ up 19.44% YTD and 6% over one month.

Here are some key positions in our model portfolio that have worked over two weeks but notice how prices have risen about 10% since 3//28.

  • The Healthcare SPDR ETF (XLV) has finally outperformed up 4.24% for the week although still down 1.72% YTD. UNH is a large core holding up 9.09% for the week to $512.81. This ETF also has major holdings in MedTech and Dx players: ABT, DHR, JNJ and TMO. It should be noted that an ETF that covers U.S. Healthcare Providers (IHF) was up 5.38% this week led by CVS,ELV, HCA and  HUM.

  • The iShares Biotechnology ETF (IBB) also showed nice gains of 3% for the week because of moves in large cap biopharma stocks such as GILD, REGN and VYX plus nice innovation and timely plays: BIIB, ILMN, MRNA, SGEN. This ETF contains some of the top well capitalized biotechs and many pay dividends. Our top picks may change but we have recommended ABBV, GILD,LLY, MRK, REGN and VRTX. See our recent review of Large Cap Biopharmaceutical stocks.
  • Small caps continue to lag despite SPDR S&P Biotech (XBI) up 2.95% for week and 7.39% YTD. No momentum. Other small cap indices lag:  IWM, IJR but Russell Growth (IWF) looking better technically.Our SMID picks looking better : EVH, QDEL,HOLX,

  • The iShares U.S.Medical Device ETF (IHI) is stabilizing up 2.13% for the week and 3.23% YTD. ABT and TMO are top holdings.

 

So the issue going forward is small cap growth tied to FED and “soft landing” ,otherwise healthcare looks good.

Disclosure long: ABBV ABT ,IBB, FSMEX, IHI, MRK, PRHSX, REGN ,UNH,VRTX.

Prices as of 3/25.

Model
PORTFOLIO
2020 2020 2020 2021 2022 2023 2023
Stock/ETF Ticker Price Wgt Price Price P 1Y Price YTD
10/25 % 12/31 % Perf 12/31/21 12/31/22 %Perf 3/25 % Perf
Trend
iShares NAZ Bio IBB* 136 15 151.5 25.7 152.62 130.55 -3.22 125.87 -4.13 –
iShares Russell 2k IWM 163 10 196.4 18.3 222.45 174.36 -16.54 171.79 -1.47 d
Merck* MRK 80 10 81.77 -10 76.64 110.81 30.33 104.8 -5.54 –
United Health UNH 330 15 350.7 27.19 502 530.27 -7.3 475.99 -10.22 d
SPDR S&P Bio XBI 117 10 140.8 48 111.96 83 -19.16 74.19 -10.61 d
Healthcare SPDR XLV 108 20 113.4 14.71 140.89 135.88 -6.15 127.3 -6.29 –
T.Rowe Hlth Sci PRHSX n/a 5 99.65 n/a 104 89 -8.22 86.35 -3.86 –
iShares U.S MedT IHI 50 10 54.83 65.85 52.57 -11.22 52.52 -0.1 u
MedTech* ABT new 5 123.5 127.46 109.83 -16.78 98.05 -10.69 d
Tracking Comp
ARK Genomic ARKG 93.26 61.24 28.23 -37.58 28.65 1.49 –
Direx3X Bull LABU 7.66 -72.78 4.57 -35.36 d
FIDO Biotech FBIOX 25.18 19.35 16.04 -5.55 15.32 -5.9 d
FiIDO MEDtech FSMEX 76.15 83.18 61.58 -11.33 62.8 2.06 –
DOW DIA 310 363.32 331.34 -7.13 322.32 -2.72 d
S&P 500 SPY 379 475 382.41 -12.15 395.75 3.48 –
NASDAQ-100 QQQ 315 397.85 266.33 -13.56 310.89 16.75 u
Top Biopharmas
Abbvie ABBV 161.64 -1.41 158.02 -2.22 –
Bristol Myers Sq BMY 71.58 -6.53 67.68 -5.93 –
Gilead Sci GILD V 85.39 35.27 80 -6.81 –
Eli Lilly LLY 362.94 16.84 336.13 -8.12 –
Merck MRK 110.94 30.33 104.8 -5.54 –
Pfizer PFE V 51.24 -23.2 40.39 -21.17 d
Regeneron REGN 721.7 20.63 820 13.65 u
Vertex VRTX 288.78 24.91 314.39 8..87 u

 

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