Update-2 …9/22…3P EDT–Healthcare stocks trying to hold up: XLV up 0.69% up from recent lows of $122. NASDAQ down 1.62%. Weak sectors Consumer Discretionary, Financials , Industrials,
- Large cap biopharma and HC strong: ABBV, BMY, JNJ, MRK,PFE, REGN, LLY.
- UNH up 1.24% at $518.
- Biotechs weak with IBB down 1%, XBI under $80 down 1.66%, support broken.
Update-1 9/19…Covid related stocks sold off on President Biden’s remarks that the pandemic was over. Mr Biden said it in an interview on “60 Minutes”. It’s ovah??Amazing volatility for a brief remark:
- Covid therapeutic stocks took a hit; MRK down 1.23%, PFE down 1.28%, VIR down 1%.
- Covid vaccine stocks: BNTX down 8.6%,NVAX down 6.5%, MRNA down 7.14%.
- Quidel /Ortho (QDEL) was down 3.22%.
Moderna now trading at a PE of 3.9, a P/S of 2.15 and a P/B of 2.82. cash per share is $20.47.
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Week ending scoreboard 9/17/22 Worse Week of the Year
- NASDAQ comp down 5.8%, S&P 500 down 4.77%,10 yr tsy 3.448%
- IWM down 4.49% at 179, IJR down 4.13% at 94, XBI down 5.39% at 83.27
- IBB down 4.24% at 122.96, XLV down 2.34% at 127.45
- XLE down 2.68% at 78.44
- Large cap biopharma top stocks 52 weeks: VRTX, LLY, REGN, MRK, BMY.
Rayno BioBeat 2022: Looking for a Q4 rally!
- Risk is OFF don’t fight the FED, buy only quality stocks.
- Technicals offer clues to market direction until we get through Q3 earnings.
- Life science stocks offer good diversification from MACRO events.
Keep in mind amidst the macro turmoil our BIoBeat is healthcare and life science stocks. The market over the last five months has been driven by FED policy and interest rates. We basically are in a choppy trading range with the S&P 500 from June 15 at the 3675 level off the high on August 15 high at the 4300 level. Volatility has been high like the September 13 downdraft of over 4%. So strategists believe that healthcare stocks can be more defensive amidst the bearish trends, The risk is that even large cap healthcare earnings can be squeezed by higher interest rates and a short term treasury yield close to 4% with no risk! Here was our healthcare and biotech Model Portfolio as of 9/05/22.
Over the past two years we have focused on large cap Biopharmas because of steady earnings, good value and dividend yield. We recently picked several small to mid cap healthcare stocks that offer strategic value and/or growth.We track both of these categories monthly. We also think smaller cap biotechs offer news and deal potential away from the MACRO. But with small caps in general very weak, (IWM) down 15.45% YTD, there would not be much buying by small and mid cap general funds. The (IJR) also holds many small-cap biotech and healthcare shares so if momentum picks up on this small cap ETF, life science stocks will benefit. We still have several winners among our small cap picks but are stuck in headwinds from higher interest rates.
The Healthcare Select Sector SPDR ETF (XLV) is beating the market down only 9% YTD because of its holdings in leading large cap biopharma and diagnostics companies. UNITED Healthcare (UNH) is one of the largest single holdings up 3.3% YTD.The S&P is down about 17% YTD.
The XBI continues in an upward trend at mid 80s level despite recent volatility in NASDAQ.The XBI is down 23% YTD and down 1.5% over five days.
Look for Biotech Market Momentum in these Funds and ETFs
For comparison and new trading ideas look at two life science ETFs one called the iShares Genomic, Immunology and Health (IDNA) that will focus on trends in molecular medicine. Holdings will shuffle around but current top positions are quite different than major biotech ETFs, For example more of the holdings of IDNA are foreign companies like Takeda, Roche and Sanofi. It is down 32% YTD and 13.83% YTD. The FBT in comparison is down 13.67% YTD and 6.63% over one month and also has unique positions like overweight in vaccines BNTX and MRNA.
Our favorite pick among the general life science funds is T.Rowe Price Health Sciences Fund (PRHSX). Among its top holdings are: UNH, TMO, DHR, ISRG, LLY and MRNA. More tools and diagnostic stocks. The Fund is down 14.33% YTD and 6.39% for one month.
Here is a Model Healthcare Portfolio with values as of 9/07/22. The model does not take into account an overweight in Large Cap Biopharmas such as : ABBV, BMY, LLY, MRK, REGN . But it does overweight UNH. We increased the XBI weighting to 105 in July.
| Model | |||||||||||
| PORTFOLIO | |||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | |||||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | 1 year | Price | YTD | 30d | ||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | % Perf | 9/3/22 | %Perf |
%Perf
|
|||
| iShares NAZ Bio | IBB* | 136 | 15 | 151.5 | 25.7 | 152.62 | -31.14 | 121.19 | (20..6) | -1.17 | |
| iShares Russell 2k | IWM | 163 | 10 | 196.4 | 18.3 | 222.45 | -20.36 | 180 | -19 | -3.7 | |
| Merck* | MRK | 80 | 5 | 81.77 | -10 | 76.64 | 11.81 | 86.23 | 12.51 | -1.58 | |
| United Health | UNH | 330 | 15 | 350.7 | 27.19 | 502 | 21.86 | 516.35 | 2.83 | -3.57 | |
| SPDR S&P Bio | XBI | 117 | 10 | 140.8 | 48 | 111.96 | -38.67 | 83.73 | -25.21 | 3.4 | |
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | -8.57 | 125 | -11.29 | -4.55 | |
| T.Rowe Hlth Sci | PRHSX | n/a | 10 | 99.65 | n/a | 104 | -25.4 | 87.39 | -16 | -2.73 | |
| iShares U.S MedT | IHI | 50 | 10 | 54.83 | 65.85 | -24.67 | 50.23 | -23.72 | -6.79 | ||
| Tracking Comp | COMP | ||||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | -60.55 | 34.67 | -43.39 | -6.83 | ||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | -33.57 | 15.91 | -17.78 | 5.85 | ||||
| FiIDO MEDtech | FSMEX | 76.15 | 83.18 | -33.96 | 58.78 | -29.33 | -7.26 | ||||
| DOW | DIA | 310 | 363.32 | -13.58 | 313.76 | -13.64 | -3.17 | ||||
| S&P 500 | SPY | 379 | 475 | -13.45 | 392.24 | -17.42 | -3.88 | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | -22.41 | 295.17 | -25.81 | -6.1 | ||||
| Top Biopharmas | |||||||||||
| Abbvie | ABBV | 21.66 | 136.28 | 0.65 | -2.93 | ||||||
| Bristol Myers Sq | BMY | 3.77 | 68.61 | 10 | -6.37 | ||||||
| Eli Lilly | LLY | 16 | 301.33 | 9.09 | -5.89 | ||||||
| Merck | MRK | 11.8 | 86.23 | 12.51 | -1.58 | ||||||
| Regeneron | REGN | -14 | 580.62 | -8 | 0.98 | ||||||
| Vertex | VRTX | 41 | 282 | 27.98 | 2.62 | ||||||