Update ….Jan 30 2:45p EST …FED to be Patient and Policy Stance is Appropriate
- FED to “wait and see” before raising rates- stocks soar.
- FED-“US Economy in a good place”
- NASDAQ up 2%, DOW up 1.73%, S&P up 1.53%
- XLV up 1.27%, IBB flat, XBI up 1.72%.
- Large cap biopharmas trail broad rally: AMGN,BIIB in the red!
- Techs lead with XLK up 2.95%
Update… Jan 28…2:15p.. Large Cap Biopharma Stocks Sink on Earnings/Growth Concerns
Markets sold off today as earnings reports from Abbvie (ABBV) and Bristol Myers (BMY) trigger sell-off. Amgen (AMGN) reports tomorrow and stock is already down 3.9% to $190 just touching the SMA 200 level. The large cap weighted IBB was down 2.27% to $107. Large cap biopharma leaders were Roche Holdings (RHHBY) up 0.14% and Merck (MRK) down 0.32%. The XLV is down 1.48%.
Mid-caps were in a red screen mode.
The CNBC Halftime Panel also raised more concerns about critical MACRO issues such as as global growth, China, tariffs and trade and the economic impact of a lingering “shutdown”. The tax cut impact has been disappointing with a larger deficit.
Over Five Days: FBT down 0.7% to $143.23, IBB down 1% to $109.44, XBI down 1.2% to $82.37.
Focus stocks over five days: AMRN up 0.7% to $17.34, GNMK up 5.58% to $6.26, TDOC up 1.03% to $63. All focus stocks are in the money.
Large cap earnings/news disappoint: Abbvie (ABBV) stocks in are fall on an earnings miss and analyst cuts due to poor guidance on 2019 Humira sales; ,Bristol Myers (BMY) sales grew 9% to $22.6B but suffered a setback on entering a market for newly diagnosed lung cancer. The Company recently bought Celgene (CELG) for $74B so that integration is the major focus for 2019.
Long Ideas For Life Science in 2019
There are no discernible trends in the market recently with life science stocks since macro-geopolitical events have curbed the 2019 rally. No doubt any solution to the “shutdown” would boost the market. Here are a several companies that had a positive reception at the recent J.P. Morgan Healthcare Conference. We previously published this post on the same topic.
AMRN made a nice pop after the JPMorgan Conference but sold off a tad to the $17.50 level. Over the past month the stock has traded in a range of $13-18.5 The market cap is a hefty $5.7B but there are high expectations for their approved drug Vascepa(tm), a prescription only omega -3 fatty acid capsule for reduction in adverse.cardiovascular events.The Company has extensive experience in lipid science and polyunsaturated fatty acids for application to cardiovascular health.
GenMark is a leading provider of multiplexed molecular diagnostic solutions for infectious diseases. The stock ran up from a low of 4 in December to the $6 level that is holding as of Jan 24. P/S is a reasonable 4.92 with expectations of 36.2% Q/Q sales growth from new products in 2019. Preliminary operating results for 2018 shows tracking of sales growth for the ePlex platform and a strong balance sheet.
NanoString Technologies provides life science tools for translation research and molecular diagnostics The stock soared from the $14 level to $22 at the time of the JPMorgan Conference. Preliminary Financial results released on Jan. 6 provided the impetus with a beat on high end revenue guidance of $83.5M.
Teledoc provides telehealth service worldwide. It offers a portfolio of services and solutions covering 450 medical subspecialties. The stock is up 37.5% over one month with a 52 week range of $35 to $86.35. TDOC trades at 11.5 times revenues of $372.3M. EPS for 2019 are expected to grow 27% and sales are expected to grow 61.6%. The stock volatility is the result of many class action lawsuits which are beyond our analysis.
XBI SPDR S&P Biotech ETF
Very choppy action since it stalled out at $84; needs to hold low support at SMA 50 level near $77. This ETF is a good indicator of risk for small cap biotechs.
All of these ‘long ideas” have been on a run in 2019 supporting the so called “January effect” for small cap stocks. We urge you to scrutinize technicals before buying any of these stocks.
Disclosure: Long AMRN GNMK TDOC and trading XBI.