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%

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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.

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Update…Jan 27

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.

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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.

Amarin (AMRN) Corporation

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 (GNMK)

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 (NSTG)

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 Health (TDOC)

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.

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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.

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