Rayno Biobeat 2017 #1: Biotech Rally Driven By M&A

Update-1… 1:45p EST Biotech Rally

Biogen (BIIB) looking good in here at $275+, up 4.2% over five days, down 2.7% YTD. IBB and XBI slight gains.

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Biotech Rally Takes Levels to January Top

IBB up 1% to $284.56, up 7.2% YTD

XBI up 1.79% to $67.07, up 13.3% YTD, a new high for 2017 but shy of one year high of $68.83

Both ETFs were recommended buys earlier at $250 and $63.5 respectively.

Biotech stocks overcame negative sentiment and political headwinds for an impressive two-day rally that included many big winners betting on M&A and other news. Big movers over the past two days are mid and small cap stocks which is impressive considering the bounce off Wednesday’s bottom. Large caps are laggards because they are more earnings dependent with less speculative underpinnings. Gilead Sciences (GILD) as everyone knows is down 8.4% YTD and despite the value has been called dead money because of weakening top line revenue. Over the past year we have been unable to break through technical tops and we are near those levels now.

As an example of momentum below are some of the stocks making good moves over five days (See Rayno Biobeat #1 for stocks that were leaders in early November).

AGIO up 11.5%,ALNY up 18%, ACOR up 22%,CLVS up 4.5%,SGEN up 7.39%, TSRO up 21.5%, XBI up 5.76%.

Many Rayno Life Science Focus stocks also rallied YTD:

Amgen (AMGN) up 14.5%.

Array Biopharma (ARRY) up 42.9%.

bluebird bio (BLUE) up 22.8%.

Foundation Medicine (FMI) up 39.3%.

Hologic (HOLX) a new pick is flat but holding the buy level of $40.

We are now approaching a significant technical top so we need at minimum a third day of accumulation to confirm a “risk on”. We have failed “breakouts” at these levels over the past year.We will update Large Cap valuation metrics now that all earnings have been reported. Regeneron (REGN) the last to report was up 1.9% today. XBI looks better than IBB right now.

Disclosure: long ARRY,GILD,FMI, HOLX, XBI others

 

 

 

 

 

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