Update-1… JY 19… Biotech and Healthcare Stocks Continue to Rally
- IBB breaks through top to $322.92 up 21.68% YTD; XBI up 1.34% today 35.4% YTD; XLV up 17.6% YTD.
- Rayno Life Science top winners YTD: ABBV up 18.19%, AMGN up 22.6%, BLUE up 55% YTD, FMI up 114.7%, RHHBY up 12.86%. All beating the S&P.
- BMY and GILD technicals looking better.
- Stay the course but raise cash selling XBI at top.
Healthcare Stocks Get A Second Wind Even With Trumpcare Failure
Uncertainty Remains With Healthcare Legislation But Repeal Unlikely
Vertex Gives Another Turbo Boost to Sector With Positive Clinical News
Biotech and healthcare stocks resumed their rally today after attempts to roll back access to patients through Medicaid cuts failed yet again. An ACA repeal looks unlikely because as many as 32 million people would lose health insurance by 2026. Hospitals in rural areas and insurance companies would also be hard hit by Medicaid cuts but global healthcare spending is expected to rise tempering short-term risks to demand for products and services. Solutions have been proposed for Obamacare and Medicaid reform but rejected for political reasons.
The healthcare SPDR ETF (XLV) is up 0.7% to $80.44, 16.6% YTD and up 110% over 5 years. The iShares NASDAQ Biotechnology Index ETF (IBB) was up 1.28% trying to break through the $320 level a YTD high and up 142.5% over five years.
Vertex Clinical News Boosts Market Again
The IBB and other indices was helped by clinical news from Vertex Pharmaceuticals (VTRX) up 22% to $160 and 117% YTD on positive news from a cystic fibrosis study on its triple-combo drug.
The Phase 1/2 data from three different triple combination regimens show promise to treat the underlying causes of the disease because the drug is targeted to mutations. The target market could be expanded from 7500 patients to 75k patients. See the above Press Release for details,”the safety and efficacy data were clear and compelling.” The revenue estimates in 2018 for the Company are $2.6B, compared to $2.37B in 2017. P/S for VRTX is 16.3 with a Q/Q sales growth of 79.5%.PEG estimates are 3.03 with a Forward P/E of 41.49. The stock hit an all-time high today of $167.
Many biotech stocks were up today with Gilead Sciences (GILD) and Regeneron (REGN) leading the large caps and mid caps were green with GWPH,RDUS, SGEN,TSRO all making good moves.
Rayno Life Science Portfolio stocks were up today and YTD. Our current top picks are Bristol-MyersSquibb (BMY) and Gilead Sciences (GILD) both offer a dividend yield and growth potential.
- Biotech stocks remain a strong hold through the current earnings cycle. Risks to portfolios should be revealed after Q2 financial reporting.
- Our favored ETF the XBI at $79 has made a big run YTD up over 33% and we recommended taking a bit off. IBB should outperform near term because of Q2 revenue growth from large cap biopharma companies.
- Momentum has returned to biotech probably led by retail trading and specialized funds.
- The S&P 500 (SPY), the Russell 2000 (IWM) and the NASDAQ all hit new highs today.
Disclosure: long BMY, FBIOX, GILD, RDUS other small caps.