Large Cap Biopharmaceuticals 2022: Market Performance and Metrics…Update-1 rally time

Update-1 11/22 Broad Market Rally with all major indices up over 1%. Small cap spec stocks gain momentum, XBI up 1.38%. Energy materials and tech strong. IBB up 0.79% to $134.  Bears acknowledge year end strength but still say 2023 fraught with weakening economy and uncertainty on earnings front with FED fighting the market.

• Mirati (MRTX) up 15 % to $86 on M&A speculation.
• Merck (MRK0 again to new highs $106.90, expands hematology portfolio with $1.35 B buyout of Imago Biosciences.
• UniQure (QURE)  up 7%  on FDA approval of Hemophilia B gene therapy.

Large Cap Biopharmaceuticals 2022: Performance and Metrics

Large cap biopharma stocks continue to offer outperformance in a time of uncertainty from MACRO headwinds. Valuations are still reasonable and product pipelines remain robust through 2023. Large cap biopharmas are a core holding for every portfolio and outperforms all mutual funds and the IBB. With strong balance sheets and R&D depth these companies are also in a position to do licensing and M&A with many smaller biotechs.

Review previous posts on Large Cap Biopharmas.

Key Points:

1. Year to date performance of our top picks are in the double digits YTD. Top performers are : VRTX  43%, MRK 36%, LLY 31%, AMGN 27%, BIIB 26%,  BMY 24%.  AMGN and BIIB were previous laggards .
2. Valuations remain attractive with forward PEs in mid to low teens and price to sales ratios under 6.
3. Lilly has a higher valuation because of expected growth from their blockbuster Mounjaro obesity product.
4. Dividends are in the 2-4% range except BIIB, REGN and VRTX
5. AMGN, GILD, LLY, MRK and VRTX are at new highs.

Disclosure: Long ABBV, BMY, GILD, LLY, MRK, MRTX, REGN, VRTX.