May 25 -Update-3 ..We will take this little rally after all the turmoil recently. Our Strategy has not changed since January which is to stay with large cap biopharma stocks . We would like to pick some winners among the smaller cap biotech and diagnostics stocks but it has been difficult. Investors want big balance sheets, reliable earnings and value and that favors energy , financials and large cap drug stocks. But its a long slog ahead with headwinds due to FED, macro and bad earnings reports. The time will come when momentum returns to small caps and we will offer trades as opportunities arise. Here is a snapshot of todays action:
- Nice gains in all indices but off the highs.
- Our XBI trade lags at 68 level down about 7% at $67; IWM UP 2.1% today.
- IBB flat at 114 with low volume recently. Stock picking not sector ETFs in biotech. XLV flat today.
- Vaccine stocks near lows over one year, limited global growth.
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May 22-Update-2 A crazy volatile week but our focus large cap biopharmas are still up YTD. And our spec trades in biotech look better because they are less susceptible to macro news and trade on technicals more so than fundamentals. Here is a snapshot of what happened last week in our space:
- The XBI was actually up 2.52%, the IBB up 2.18% compared to the QQQ DOWN 4.39%.
- Over 52weeks these large caps are still near highs:MRK LLY BMY AMGN .
- We bought AZN up 4.86% this week and sold SGEN up 2.96% for the week.
- Vaccine stocks perked up: BNTX up 2.62%, MRNA down 1.2%.
- Boring biotechs with dividends: GILD up 2.36% to $63.84 4.57%, GSK up 2.77% to. $44.52 4.46%.
- XLV up 0.9% for week and down 7.49% for month, a good entry point.
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May 16-Update-1 Mixed market with NASDAQ down 1.2%. Most annoying is new buzzword is “multiple compression” meaning stocks are high priced as FED talks tough.
But biopharma stocks did well with nice gains: BMY, MRK, PFE,REGN,SGEN, VRTX. Our new trade XBI held at $68 level. Lilly (LLY) gained 2.66% to $299 getting momentum on FDA approval of new potential blockbuster type-2 diabetes drug Mounjaro (tirzepatide).Large caps barely moved the IBB stuck at $113.
Biogen (BIIB) remains among the weakest still hung over from its Alzheimer drug miss.
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Large Cap Biopharmaceuticals: Provide Growth, Yield and Value
- All of our top picks beat the market: BMY,MRK,ABBV,VRTX,REGN and are off their 2022 highs.
- Laggards GILD and GSK provide good value and dividends.
- Most volatile stocks in the group are Regeneron and Vertex but neither provide dividends.
Now that all major biopharmaceutical earnings are in we can review the financial metrics and see if our portfolio needs re-balancing. It was a tumultuous week as we posted but there was good relief for riskier small cap biotech stocks on Friday and we added a little XBI, which was up 5.68% Friday to $68.60.We did not trade off the tops of REGN and VRTX because we were busy in other volatile sectors.Last week’s trading was very unusual with most sectors hit very hard in what has become a grueling bear market. Commodities reman very strong with wheat, gasoline and soybeans among the winners.
Two new positions to consider for longer term trades are: AstraZeneca (AZN) at $63.14 and Pfizer (PFE) at $49.92. Both trade at the low end of their range and offer good dividends. AZN stock has been weak because of guidance on vaccine sales but has $39B of revenues from te acquisition of Alexion. We will update both stocks on any news and as you know Pfizer distributes the mRNA vaccine of BioNtech (BNTX).
in the mid-cap biopharma sector we own Seagen (SGEN) now at 135 with good potential from good news from ASCO.
Disclosure long ABBV, BMY, MRK, REGN, VRTX, XBI.
| Company | Ticker | Price | Price | Price | MktCap | % Perf | ||||||
| COMPANY | 1/15/18 | 5/13/22 | 11/1/19 | 2022 | YTD | FWD | Analyst | % | 2022 high | |||
| $B | P/S | PE | Recom | Div | ||||||||
| Abbvie | ABBV | 100.000 | 153..50 | 81.75 | 269 | 13.37 | 4.8 | 12.86 | 2.1 | 3.67 | 175.92 | |
| Alexion*(ALXN) | ALXN | 123.000 | 182.5 | 109.38 | 40.33 | n/a | 4.56 | 9.38 | 2.2 |
*acquired by AZN
|
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| Amgen | AMGN | 185.000 | 243..40 | 221 | 129 | 15.14 | 4.9 | 12.77 | 2.5 | 3.19 | 258.45 | |
| AstraZeneca* | AZN | 35.000 | 63.14 | 40.34 | 181 | 8.39 | 4.86 | 12.32 | 2 | 3.78 | 71.68 | |
| Biogen | BIIB | 336.000 | 199.11 | 299.2 | 30.3 | -17 | 2.8 | 12.33 | 2.3 | – | 239.3 | |
| Bristol Myers* | BMY | 63.000 | 75.8 | 57.16 | 160.5 | 21.57 | 3.42 | 9.32 | 2.1 | 2.85 | 78.17 | |
| Celgene* (BMY) | CELG | 106.000 | n/a | 108.53 | 77 | n/a | 4.69 | 8.7 | n/a |
*acquired by BMY
|
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| Gilead Sci | GILD | 79.000 | 67.43 | 62.37 | 77.84 | -7.57 | 2.86 | 9.85 | 2.4 | 4.68 | 74 | |
| GlaxoSmithK | GSK | 38.000 | 43.32 | 45 | 112.3 | -1.77 | 2.49 | 12.59 | 2.2 | 4.59 | 46.97 | |
| Eli Lilly | LLY | 85.000 | 291.63 | 113 | 272.9 | 5.58 | 9.31 | 31 | – | 1.34 | 314 | |
| Merck | MRK | 59.000 | 90.41 | 78 | 227.6 | 17.97 | 4.22 | 12.29 | 2.2 | 3.05 | 91.05 | |
| Regeneron | REGN | 367.000 | 645.52 | 310.48 | 72.76 | 2.22 | 4.41 | 14.46 | 2.1 | – | 747.42 | |
| Vertex | VRTX | 158.000 | 246.72 | 233.89 | 66.13 | 12.35 | 8.73 | 2.1 | – | 292.5 | ||
|
P 5/14/22
|
%YTD | 2022 high | ||||||||||
| XBI | 68.6 | 83.66 | -38.73 | 111.96 | ||||||||
| IBB | 113.14 | 109.85 | -25.87 | 152.62 | ||||||||
| FBIOX | 13.38 | 20.26 | -30.85 | 19.35 | ||||||||
| XLV | 128.6 | 94.87 | -8.72 | 143.42 | ||||||||
| XPH | 40.17 | 39.47 | -12.97 | 46.15 | ||||||||
| QQQ | 301.94 | 201.23 | -24.11 | 397.85 | ||||||||