Update-3 6/16/20 at opening…Futures up on 18% increase in Retail Sales and New Potential coronavirus treatment-Dexamethasone.
- Low dose steroid treatment is a major breakthrough and can save lives.
- Coronavirus stocks take a hit: GNMK INO MRNA QDEL, but XBI up 1.79%.
- Update at the close as this could be a pivotal day.
Update-2 Coronavirus Stocks Soar on Fears of New Outbreaks: trade as of 12:40 p EDT
- Big winners in DX:CEMI CODX GNMK QDEL, TDOC up 7.33%.
- Big winners in Vx: BNTX INO MRNA NVAX
- Antiviral plays: GILD up 0.85%, REGN up 0.38% VIR up 2.37%
- XBI up 0.79%.
Quidel (QDEL) is low on cash so I expect to see a raise soon.Why not if sales are growing at 20%+?
Here is where we were on CORONAVIRUS PLAYS on May 31.
Update-1 Away from Cyclicals Back to Core Large Cap Growth
- Here is an update on the Worldwide spread of coronavirus.
The market swerved again back to earlier 2020 winners with large cap tech XLK up 1.67%, 13.67% YTD and the broader based NASDAQ-100 (QQQ ) up 1.25% ,15.8% YTD.
Large cap biopharma stocks held their value, IBB up 0.32%, with top winners: ABBV, AMGN, AZN and VRTX.
Gene therapy stocks with nice 2% + gains: BMRN ,BLUE, EDIT, SRPT.
Coronavirus plays were active in vaccines: INO up 4.95, MRNA up 3.16%; and Teledoic (TDOC) up 4.67%; COVID diagnostics former high fliers soared today: GNMK up 6.85% to $9.67 and QDEL up 7% to $167 level.
Quidel (QDEL) is behaving as if it could be the leader in COVID Dx with the recent news of emergency FDA approval for a rapid 15min. Antigen assay. But the field of COVID Dx is broad with many large and small players with platform technologies: ABT, CODX, HOLX, GNMK up 6.85%, DHR up 1.91%, TMO etc
Momentum Trading Ignores Fundamentals–Companies Get a Pass
Liquidity from FED Results in “Risk On” Crazy Trading and Big Moves
Biotech and Healthcare are still Core Holdings
As the momentum traders and hedge funds respond to the “re-opening”of the economy what do you do with your biotech portfolio? First you gotta remember that many large cap biopharmaceutical companies have top line growth and pay dividends, Second you did well with biopharma and diagnostic stocks because they provide innovation that addressed the pandemic. Vaccines and molecular diagnostics offer near term solutions that boosts the confidence of investors. In the meantime the FED and low interest rates keep the economy from falling more. Those who follow coronavirus related stocks are now more knowledgable so future gains will be harder to achieve. But as we wrote in an earlier article there should be a considerations for your portfolio as to whether your trade is for short-term performance or for building a long term portfolio.
Keep in mind we have already hit two phases of the current bull market that began in mid-March. The first Phase I I’ll call the COVID or the “lockdown ” that encouraged people to stay at home; and now Phase II the liquidity phase driven by the FED,
Here are some assumptions going forward:
- Volatility with continue as we are still in a FED catalyzed economic recovery until the pandemic is fully resolved.
- The market is highly sensitive to news flow both macroeconomic and product clinical/epidemiological events.
- Fundamentals matter less until we get through the crisis and the next stage of the “re-opening”.
Traders have taken advantage of the volatility by scooping up beaten down airlines, energy and industrial stocks. But life science investors want to have portfolio model that is less dependent on trading. We are betting on long term growth trends in the life science sector because infectious disease, cancer and autoimmune disease are still prevalent and growing.
Here are some biotech portfolio ideas:
- Core-large cap quality stocks with strong R&D and product pipelines: Abbvie (ABBV), Alexion (ALXN), Bristol Myers (BMY), Gilead Sciences (GILD), GlaxoSmithKline (GSK), Merck (MRK) and Roche ADR (RHHBY).
- Themes from innovative technology: Gene Therapy -CRISPR (CRSP), Sequencing– Illumina (ILMN), Telemedicine -Teledoc (TDOC).
- Mid-caps with Breakthrough Potential: Oncology-Blueprint Medicines (BPMC), Virology- VIR Bio (VIR), Antibodies- Xencor (XNCR)..
- Diversified Funds: Fidelity Sel Bio (FBIOX),T.Rowe Price Health Sciences (PRHSX ).
- IBB at $133.10 up 4.66% over one month.
- XBI for bullish trades now at $104.81 up 6.8% over one month.
Life science and biotech stocks have led the way out of the early 2020 sell-off.The hard part now is adding cyclical and industrial stocks. Start with ETFs and see how that goes.