8/5… Risk OFF with Trade War and a Currency War
- XBI down 3.33% to $81.22, IBB down 2.65% to $102.29.
WE will update later this week. Tuesday 8/6 we will attend the AACC Clinical EXPO in Anaheim CA.
Update-2..8/1 1:30p VRTX sparks biopharma stocks up 6% on earnings revenue beat.Product revenue guidance upped to $3.6-3.7B. Five new disease programs. Analyst consensus-BUY.
More Trump tariffs dampen bullish reversal from yesterday’s reversal down! NASDAQ down 0.5%.Back to macro driven market as tariffs take center stage.
Update-1 7/30 …Some Nice Gains with XBI up 1.51%. Earnings look good. Lets see what market thinks tomorrow.
- Mid-Caps doing well: NBIX, XNCR, ANAB, INCY, AGIO,ARNA, ALNY etc.
- Gene therapy leaders:ALLO, EDIT, SLDB, NTLA.
- Large Cap Movers: ALXN, VRTX, BIIB, REGN, MRK.
- AMGN GILD MRK earnings beat. AMGN,MRl are “buys” but GILD is a HOLD(source Yahoo).
Here is a link from 2/11 2017 Large Cap Biopharmaceuticals Metrics:
- Many stocks are still lower in 2019 compared to 1/7/16 prices. REGN at $501! ALXN at $174,
- Peak stock prices of biopharma is still JY 2015!
Week Ending July 27-Biopharma Stocks Surge
Healthcare Sector Performance (S&P 500 Healthcare) remains Weak Up Only 0.36% this week.
Look for Rotation into Biopharma Which Trails the S&P 500 up 23.6% YTD
Biopharma stocks have been on vacation for most of July but on Friday came back in a surge that should perk up interest in the sector. The bellwether XBI shot up 1.85% to the $86 level on Friday tracking NASDAQ gains of 1.11%. The XBI is up 20%YTD. Maybe traders were emboldened by moves in large cap tech stocks or were relieved that large cap biopharma earnings were not so bad. Don’ t get too excited if you are a long-term biotech investor because we are well off April highs and the hot sectors for 2019 have been large cap tech, semiconductors and the precious metals. .
But the action on Friday was impressive so review again our last post Rayno BioBeat #1 2019 to review trends in the market. Unusual volatility continued particularly with the most beaten-up stocks.
- Gene Therapy stocks continued their momentum when NASDAQ is risk on. Laggards and leaders moved up: ALLO 4.3%,CRSP 4.55%, EDIT 5.06%,NTLA 3.56%,RGNX 3.39%,SGMO 3.74%, SLDB 34.4,%!!
- Mid-Caps usually follow in a rally and a green screen dominated: ARNA 2.77%,BPMC 2.64%,INCY 1.71%,MRTX 1.54%, NVCR 2.37%,RGEN 1.77% etc. Laggards bounced off their bottom: IMMU 2.34%,LGND 0.94%,MRNA 4.5%,NKTR 3.77% etc.
- The lagging Russell 2000) was up over 1% but still off peaks from early March and early May up 17.5% YTD mainly from gains in Jan/Feb time frame.
- Large caps were mixed in an earnings week but buyers came and saw value in ABBV GILD,REGN near their lows YTD and RHHBY solid after earnings. ALXN and VRTX once hot but inexplicably losers Friday.
The large cap weighted IBB held its ground up 1% at the $105 level, but up barely 8% YTD after earnings were reported for several large cap biopharma companies. The S&P is up 23.6% YTD. One big issue you all know is drug pricing and the Grassley-Wyden proposed Drug Pricing Reform to lower prescription drug prices.
Here is a snapshot of selected Large Cap Biopharma stocks that reported Q2 earnings (see links) recently including analysts’ summary rating:
Abbvie (ABBV) $67.76, beat EPS by $0.9, down 0.85 over 5 days. Revenues flat to $8.225B. HOLD.
Alexion (ALXN) $114.63, down 6.3% over 5 days, beat EPS by $0.30.Revenues up 15% to $1.2B BUY
Biogen (BIIB) $238, beat EPS by $1.62, up 0.1% over 5 days. Revenues up 8% to $3.6B. HOLD.
Bristol-Myers (BMY) beat EPS by $0.12, up 3.6% over 5 days.Revenues up 10% to $6.8B. HOLD
Gilead Sciences (GILD) up 3% over 5 days. Q2 EPS Jy 30 reporting. BUY.
Roche Holding (RHHBY), Sales up 9%, EPS up 13% H1, up 0.85 over 5 days, outlook raised. BUY.
Microcaps Coming Back?
It was another wild week for microcaps where traders made huge profits in selected biopharma small caps.Indeed there are too many early stage stocks to follow but here are a few you may know. We now own tiny positions in these stocks before adding more on news events.
Achillon (ACHN) up 18% to $4.65, Ocular Therapeutix (OCUL) up11.21% to $4.86, Verastem (VSTM) up 12% to $1.47 Ziopharm Oncology (ZIOP) up 9.75%.
The tape is strong but we need biopharma to continue to rally with NASDAQ. Investors looking for more defensive dividend plays should consider ABBV, GILD and RHHBY.
Disclosure long ABBV, BMY, GILD, MGTX MRK,RHHBY,