10/15 After the Close… XBI Up 7.26%…Green Screen…MOmentum is back
Biotech stocks soared today in a broad rally showing a good appetite especially for small and mid-cap stocks. This could be a counter-trend rally in a biotech bear market but there is a lot of money on the sidelines ready to be put to work.
- The small cap more speculative XBI rose 7.26% well above the late September bottom in $60 region. This is a good bellwether for a continuing Q4 rally.
- Large caps moved up across the board with the IBB up 4.37% and our favorites ABBV, AMGN, REGN, and GILD doing well.
- The healthcare sector returned as a leader today and the XLV was up 2.23%.
- This has been a good market for traders because the volatility can offer 10-20% moves in a few days. e.g. ACRS up 40%+, NVCR up 36%+ both recent IPOs. We did find two down stocks today Serepta Therapeutics (SRPT) with an upcoming advisory meeting on January 22, 2o16. And well known Valeant Pharmaceuticals (VRX) down 4.75%.
- Large cap company earnings will start coming out during the last two weeks of October.
A new biotech ETF was launched today with symbol CNCR, focused on immununotherapy which holds an equal weighted portfolio of 30 large and small cancer therapy (immuno-oncology) stocks such as AMGN, BLUE, BMY, CELG, CLDX, JUNO, KITE etc. If this ETF is successful no doubt it will move the underlying smaller stocks. We still favor XBI for trading and overweighting a portfolio because of its track record you should track the performance vs CNCR.
Technicals are looking much better and the tape action is robust. The FED appears on hold. The IBB is now up 3.76% YTD a little better than NASDAQ up 2.83%.
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Caution- Risk Remains High But Opportunities Lie Ahead
Rayno Biopharmaceutical Stocks -see chart below
Obviously all of these stocks were up huge YTD until early August when the correction began then they were hit harder on the second downturn on September 21 with the Hillary tweet on drug pricing hitting biotech bear market technical levels. There is still likely to be headline risk on drug pricing so stay cautious until Third Quarter earnings come out.
Rayno Top Winners YTD 10/15 Update
Fibrocell Science (FCSC) up 69% up 6.55%
Clovis Oncology (CLVS) up 61.6% up 9.38%
Regeneron (REGN) up 28.4% up 1.98%
Seattle Genetics (SGEN) up 21.3% up 7.6%
Gilead Sciences (GILD) up 5.6% up 3.3%
One of our biggest movers today was Ignyta, Inc. (RXDX) up 13.76% today and 13.87% YTD.
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Rayno Top Losers YTD
Biogen Idec (BIIB) down 21.5%….down again today in pre-market
Abbvie (ABBV) down 14.6%
Alexion(ALXN) down 13.6%
GlycoMimetics (GLYC) down 4.6%
Vertex (VRTX) down 4.3%
Two stocks to watch when earnings hit are Biogen BIIB) and Gilead Sciences (GILD) both huge winners over five years but technically weak lately. Both should be watched for margins and pricing:
BIIB trades at P/S of 6, Forward PE of 14.87, PEG 1.14, P/FCF 19.27.
GILD trades at P/S of 5, Forward PE of 8.64, PEG 0.62, P/FCF 8.49.
Celgene (CELG) a highly touted stock on CNBC and with several analysts is still up 5% YTD and is recovering nicely to the $117 level from lows of the year near $105. P/S for 2015 are 11 but revenue estimates are $11.29B for 2016.
Biotech stocks are “bobbing” just above the early October bottom with a bit of buying support but still 13% off mid-September highs. Sentiment remains negative because of long-term pricing concerns. As we have said before there is still a good chance of a fourth quarter rally assuming the NASDAQ can hold up.
Over the past week there has been a rotation out of the healthcare and life science sector into cyclical stocks like energy and industrials. As earnings roll-out look for growth in telecom, consumer discretionary and financials compared to healthcare (XLV). The XLV has rallied but is flat YTD tracking the large cap weighted IBB. Despite the choppy action there are good trades in small and mid-caps every day so look for the XBI to get some momentum.
Rayno Biopharmaceutical Stocks-Performance YTD as of 10/12
| Company | Ticker | Original | Price $ | 5 Yr High | RaynoTotal | Price 9/10 | YTD 10/12 | Price 10/12 |
| Start | % Perform | % Perform | ||||||
| 8/12/2015 | ||||||||
| Abbvie | ABBV | 3/25/2014 | 51.7 | 70.76 | 33 | 59.58 | -14.6 | 55.9 |
| Alexion | ALXN* | 2/2/2009 | 17.5 | 203.3 | 994 | 186 | -13.6 | 159.9 |
| Alkermes | ALKS | 3/22/2013 | 23 | 75.17 | 191 | 69.67 | 1 | 59.1 |
| Albany Molec | AMRI | 2/10/2011 | 4.32 | 23.95 | 391 | 21.19 | 6.9 | 17.43 |
| Amgen | AMGN | 2/2/2009 | 55 | 173.6 | 210 | 153.1 | -3.3 | 154.4 |
| Array | ARRY | 5/26/2015 | 7.7 | 8.59 | -22 | 5.93 | 5 | 4.97 |
| Biogen | BIIB | 2/2/2009 | 48.5 | 480.18 | 552 | 312.62 | -21.5 | 266.27 |
| Clovis Oncology | CLVS | 1/13/2015 | 60 | 102.28 | 31.3 | 104.26 | 61.6 | 90.75 |
| Fibrocell Sci | FCSC | 6/11/2014 | 3.7 | 6.4 | 90.2 | 5.9 | 69 | 4.38 |
| Gilead Sciences | GILD* | 2/2/2009 | 25.5 | 123.37 | 356 | 107.25 | 5.6 | 99.6 |
| GlycoMimetics | GLYC | 10/16/2015 | 6.74 | 9.68 | 12.7 | 7.6 | -4.6 | 6.89 |
| Ignyta | RXDX | 4/7/2015 | 10 | 19.4 | 37.2 | 15.57 | 1 | 10.05 |
| Regeneron | REGN | 2/2/2009 | 17.5 | 544 | 3308 | 531.72 | 28.4 | 527 |
| Roche ADR | RHHBY* | 1/30/2014 | 33.5 | 38.54 | 9.5 | 33.29 | -3 | 33 |
| Seattle Gene | SGEN | 2/2/2009 | 9.5 | 49.84 | 471 | 41.58 | 21.3 | 38.9 |
| Vertex | VRTX | 11/15/2013 | 62.8 | 137.5 | 219 | 132 | -4.3 | 113.5 |
| *split | ||||||||
| Acquired | Acq Price | % Return | ||||||
| Astex | ASTX | 1.63 | 8.5 | 421 | ||||
| Cephalon | CEPH | 76.5 | 81.5 | 6.5 | ||||
| Cubist | CBST | 21.5 | 102 | 374 | ||||
| Optimer | OPTR | 11.8 | 10.75 | -9 | ||||
| PharmCyclics | PCYC | 38.2 | 261 | 583 | ||||
| ViroPharma | VPHM | 12 | 50 | 316 | ||||
| ETFs | P 8/12/15 | P10/12/15 | Perf %YTD | |||||
| FBT | 128.42 | 121 | 102.35 | flat | ||||
| IBB | 385.02 | 370 | 309.23 | 1.94 | ||||
| XBI | 261.6 | 236 | 64.17 (s) | 3.25 |