9/12/22...Bristol-Myers (BMY) up 5% on FDA approval of psoriasis drug.Large cap biopharmas rally: AZN, GILD, MRK, etc. Mid- caps green esp MDGL,MRTX.
- Morgan Stanley Healthcare conference was today could account for biotech strength.
- Biden Issues Executive Order on Advancing Biotechnology.
- Time to look at T.Rowe Price Health Sciences Fund (PRHSX). Already in our model portfolio.
9/9/22… Nice broad rally day with the NASDAQ up 2.14%.The Russel small cap(IWM) was strong up almost 2%. Tech stocks (XLK) came back up almost 2%.The rally today.caught many traders by surprise given the tough bearish rhetoric. Is it a pre-CPI rally expecting lower inflation data next week or just traders looking for bargains?
The IBB was up 1.12% and the XBI up 0.67% keeping the biotech momentum going. Large cap biopharmas were green with the following stocks near 52 week highs; LLY, REGN, VRTX . Momentum stocks and ETFs were up: ARKG, IONS,NTLA,RGEN,TDOC etc.
Moves among our small/mid cap pick list were: EVH, CRSP, CYRX, and QDEL.up 4% to 86.
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9/8/22 2P EDT Biopharmaceutical movers up: ABBV up 1%, BIIB up 2.85%, REGN up 19%, VRTX up 1.5%. Even the IBB is up 2.85%
The more speculative XBI was also up 2.59% to the $86 handle.
Moderna(MRNA) recovered as their R&D show inspired confidence in their mRNA technology and product portfolio.
Regeneron clinical trials shows a “retooled’ Eyelea could help its competitive position.
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Healthcare Sector Still Looks Good Despite Losses Over Past 30 Days
- Geopolitical Turmoil and FED Fears curb buyers with knee-jerk selling and sector rotation.
- Large cap Biopharma with dividends still offer good value.
- Small Cap Picks sell-off but expect a Q4 rally.
The summer rally is over it’s a holiday weekend with low trading volume and bad news is pervasive..A decent jobs report on Friday brought in buyers in early hours until Russia intervened with a Nord Stream suspension of natural gas to Germany. Just another risk-off day where raising cash is the new play. So don’t fight the FED eh?
Healthcare stocks are normally a defensive weighting in your portfolio but in this market who knows? Still the XLV down 11 % YTD is better than the DOW down over 13% and the S&P down over 17%. Biotech stocks were beginning to shown nice gains but speculative interest waned in mid-August as they sold off. The XBI sold off but is still up 3% over 30 days. We are still expecting a Q4 rally In speculative biotech and the XBI if it can hold the $80 level.
Our small/mid cap picks sold off over one month with the IWM down 3.7% but CCXI, EVH and MRTX still look good. Modern (MRNA) will need help from their R&D update this Thursday.
Large Cap Biopharmaceuticals Offer Good Value.
We have favored large cap biopharma over the years because of new product potential, dividends and relative safety. We recently published a review . Lately with market volatility rotation has been a factor with a shift to treasury bonds and energy with rising rates. Many bearish analysts have recently focused on valuations of large cap growth stocks saying with short term treasuries yielding over 3% there is a good alternative to stocks. I might add that the IBB has underpeforrmed down over 20% so not a good biotech trading option for the short term. The XLE Energy SPDR ETF by contrast is up 44% YTD!
So maybe we need to look at biopharma valuations under the pall of higher rates and government intervention on pricing. But Price to Sales ratios of about 5 and Forward PEs under 20 are not out of line with the S&P PE of 21.
11/6/22…Bear Market Metrics Two terms have crept into the lingo of market pundits: PE Compression and Free Cash Flow yields. One continuing bear market analysis narrative says with slower growth and a FED induced recession coming a market PE above 20 is unsustainable. A good stock to further analyze is the biggest and one of the most widely held stocks in healthcare United Health (UNH). UNH has a P to free Cash Flow of 33 and a PEG of 1.88 not cheap but good value considering it is still a growth stock.
| 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
|
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| 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 | ||||
| FIDO 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 |