Earnings Updates-2… 1/29 Large Cap Biopharmaceuticals

Valuation Models of Large Cap Biotech to be Updated Next Week

IBB trying to bottom above $262 down 21.8% YTD

Abbvie (ABBV) mixed Q4, maintains 2016 outlook of $4.90-$5.10;Q4 IMBRUVICA of $343M;Merck Hep-C competition coming. ABBV off 3.35%.

Amgen (AMGN) beats raises 2016 forecast to $22-$22.5B, EPS $10.60-$11.00;2015 Revenues up 8%, EPS up 21%. AMGN up 1.38% to $150.

Bristol-Myers Squibb (BMY) beats on Q4 Earnings and Revenues; 2015 Revenues of $16.6B driven by growth in Opdivo and Eliquis; guidance EPS for 2o16 of $2.20-$2.40; strong sales in Immuno-Oncology products. Stock up 1.26% to $61.91.

Celgene (CELG) misses on earnings, beats on revenues; Q4 product sales up 24% to $2,539M, full year up 21% to $9161M; 18 Phase 3 trials underway through mid-2018; New product sales 2016 guidance to $10.5-11B YoY 17%. CELG stock down to $98.5,  a 9% fall over 5 days.

Update-1 Biogen (BIIB) soars 7.9% on Earnings

Multiple Sclerois drug Tecfidera tops estimates with sales of $993M.

2015 Revenues of $10.8B an 11% increase with EPS with GAAP diluted EPS of $15.34. Balance sheet strong at $6.2B . Forward PE reasonable at 14.

—–330p… 1/27/16

IBB testing new 52 week lows at 272 down over 3%. XBI down over 5% after FED Meeting.

IBB iShares Nasdaq Biotechnology daily Stock Chart

——–AMGN,BMY, CELG,ABBV up later this week——–


Biotech Stocks Caught Snoozing in Today’s Rally

Dow Jones up 1.78%, NASDAQ up 1.09%, S&P up 1.41%

Large Cap Earnings Reports Begin This Week

Healthcare and biotech stocks were lagging the big rally today with the IBB near the flat line down and the XLV barely up 0.5%. Energy and material stocks were up sharply lifting the Dow and the S&P up over 1.5% in an abrupt reversal from yesterday’s gloomy session. the market has been fixated on crude and today March crude futures rallied to $32 boosting the XLE 3.78% at the $55 ‘handle” its support level for January. Large cap energy movers were drillers like Schlumberger Ltd. (SLB) up 3.21% and Andarko Petroleum (APC) up 7% as well as refiners Valero (VLO) up 3.95%. Materials had huge moves up 3% led by miners, steel and chemicals even Corning (GLW) up 5.49% on an earnings beat.

The IBB has been in a 4 day holding pattern near the 280 level after a 10 point move off 2016 lows last week. The small cap weighted XBI is faring worse YTD down 23% and trying to hold support near the $54 level. We posted an article on large cap biopharmaceuticals which will look at technicals and earnings trends of the Top Eight Companies in order to get a better perspective on 2016 leadership. We expect large caps to outperform in the current “risk-off” mentality clouded by macro issues like China and global growth. Of some concern is that the J.P.Morgan Healthcare Conference did not provide a buying catalyst despite all the pipeline updates.

  • With stock momentum waning we look to 2015 earnings reports to provide a boost in sentiment because of growth potential.
  • Valuations are certainly more attractive with lower 2016 PE estimates for ABBV, AMGN, BIIB and GILD. GILD is the lowest at 7.5x and ABBV is 11.7x. See reporting and guidance beginning this month. Watch for the new PEG forecasts with a positive growth outlook.
  • Political criticism of drug pricing is likely to continue with Trump jumping on it this week.
  • Of all the large cap biotechs we favor ABBV and GILD until financial reporting completed.
  • M&A should continue as a value driver because pipelines need to be rejuvenated and cash positions are robust.

Keep in mind we are in a bear market which began in September 2015 and failed the Q4 2015 comeback rally. Technicals are broken. We look for large cap stocks to provide value and direction for the sector and the Rayno Biopharmaceutical Portfolio is under review pending earnings and 2016 guidance.

disclosure: Long ABBV, GILD.

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