Stealth Biotech Sell-Off-Caution Urged-Red Screen
Aegerion (AEGR $50) down 7%, Medivation (MDVN $66.9) off 5%, Puma (PBYI $113.5) off 5.4%, IBB ($261.75) off 2.8% , XBI ($161.9 off 3% etc.
Most Biotech Stocks Recover From Two Day Sell-Off
Stocks Surge After Ukraine Risks Lowered
Five Days of Trading:
FBIOX ($225.80) flat, 52 week high, $228.50
IBB ($269.23) up 0.2% , 52 week high $275.40
XBI ($167.45) up 1.86%, 52 week high $172.52
Stocks soared on March 4th after pundits and geopolitical analysts tempered their concerns over escalating conflict in the Ukraine. Although economic risk is still there particularly due to concerns about banking and energy trades for example between Germany and Russia, all powers began to realize that war over the Ukraine would be damaging to all. Life Science stocks pretty much recovered at 2014 highs.
Rayno Life Science stocks were near 52 week highs today in an explosive NASDAQ and small cap Russell (IWM $119.83) rally including new highs for Illumina (ILMN $178.83) and Regeneron ( REGN $348).
But Revenue Growth Is Key
Some biopharmaceutical stocks were chopped lately because earnings reports were considered disappointing. A paradox of mid-cap emerging companies is that revenue growth can be tracked more critically as in the case of these former momentum stocks:
Aegerion (AEGR) off 14.7% over 5 days with a 52 week high of $101. Net product sales for 2013 were $48.5M with 2014 Sales to be in teh range of $190-210M. P/S for 2014 is 34.3.
Medivation (MDVN $71.11) off 17.3% over five days with a 52 week high of $88.20. 2013 Revenues were reported as $272,942,000. 2014 Xtandi Sales in U.S. were expected to be in the range of $500-$530M. P/S for 2014 is 24.
In our mid-cap “valuation model” for tracking the biotech bull market we can see how Price to Sales (P/S) becomes a key metric even after only a few quarters of reporting. Until we get another major acquisition in the $10B valuation range revenue growth and maturation of pipeline is key.