August 6…Rally Fails: Sell-Off Underway 11:24A EDT
The sell-off in biotech began at the opening and continues two hours later. The speculative smaller cap Exchange Traded Fund XBI is down 3%. There is a red screen across the board with many high fliers down 4%. The IBB is down 2.5%.
1:45 P EDT
Go back to our post of July 30 when the July upward trend weakened. Momentum is clearly broken and the IBB is flat from July 7. Since the downturn in the sector in late July the market is choppy and has no trend until today. The volatile XBI is now down 2.34% over 30 days. Moreover healthcare is the weakest sector highly unusual taking a hit today along with NASDAQ-the XLV is down 1.78%. Take some off your biotech allocation.
Energy is in a countertrend rally up 0.92%.
Biotech Stocks Back on Track Led By Large Caps
Biotech stocks remained a bit choppy but it was a good day overall. Regeneron (REGN) is still the biotech leader and raised its forecast for its eye drug Eyelea. Total Revenues including collaborations were $993M for Q2 and guidance was raised 45-50% over 2014. GAAP net income was $1.69/share vs $0.85 in 2014.
Vertex (VRTX) increased its 2015 revenue guidance for KALYDECO cystic fibrosis drug from $575 to $590M and gave an update of its pipeline. KALYDECO revenues were $159.9M for Q2
Rayno Life Science Winners:
Biogen (BIIB) up 1.85%
Regeneron (REGN) up 4.8%
Vertex (VRTX) up 2.42%
Other notable Rayno Biopharmaceutical Portfolio movers were:
Alexion (ALXN) up 0.73%, Clovis Oncology (CLVS) up 1.4%, GlycoMimetics (GLYC) up 2%; Fibrocell Science (FCSC) was down 3.48%.
August trading can be choppy and following up on our post of 7/30 we still remain cautious on small caps. with the exception of Biogen (BIIB) large caps have delivered on earnings and revenues. Over the past five days healthcare stocks are beating the S&P and some other sectors such as technology. Industrials are also beating the S&P up 1.94% over 5 days. The IBB is up 1.65% over 5 days.