Update-2 4/13 11;36 AM EDT.…GSK buys Sierra Oncology (SRRA) for $1.9B
https://www.bizjournals.com/sanjose/news/2022/04/13/glaxosmithkline-to-buy-sierra-oncology-for-19b.html?ana=yahoo
- XBI up 2.48% to $89 handle, ARKG up 2.35%.
- Large caps lag except REGN up. ABBV down over 5%!
- Green tape today, look at spec small cap trades; volatility rules.
- XLV flat to down at $138; financials weak on JPM.
Update-1 Be diversified. Mixed picture with bit of reversal one hour after opening. Mild decline in indices and rotation into energy with XLE up 1.67%.Healthcare XLV down about 1%. Some analysts think inflation has peaked. Russell 2000 up 0.3% and you can see it in some small cap spec stocks. Earnings season will be pivot point.
Why are large cap biopharmas down? Profit taking, FDA delays, or overextended, need to find out?
- XBI flattish, IBB down 0.77% with a lot of red screen.
- Medtech and devices flat to down: ABT, DHR, GKOS, IHI,
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Healthcare Stocks Lead the Way Up
- Rising rates dampen market sentiment.
- Healthcare stocks lead the way as defensive plays.
- Large cap biopharma remains strong and provides dividends.
Healthcare stocks led the way up 3.44 % over the past week as macro concerns dominate the market. With inflation and energy costs soaring, the FED ever threatening with higher rates and headlines from the war in Ukraine investors are seeking more defensive positions. Commodities and staples are among sector leaders. Rebalancing your portfolio by sector and good stock picking can provide diversification in a volatile market. Energy and healthcare stocks should be overweighted.
As you can see from our model healthcare portfolio below our core ETF pick is the broad based XLV up 11.98% month to date and 22.42% YTD. And United Health Group (UNH) a leading healthcare services company is weighted heavily in the XLV plus we added another 15 % .The UNH stock is up 8.73% YTD and 49.2% over one year. Another good healthcare ETF to track is the iShares U.S Healthcare Providers ETF (IHF) up 18% over one year and up 9.14% over past month.
Large Cap Biopharma Provides Blockbuster Products and Dividends
Most of our biopharma picks are at or near all time highs: ABBV, BMY, MRK, PFE, REGN, RHHBY, VRTX. Merck (MRK) a laggard is up 1.4% YTD on the perceived value of its cardiovascular pipeline and the recent acquisition of Acceleron. We will review upcoming earnings and especially guidance of the sector near the end of the month and here is our last summary.
Better returns have been achieved by owning a basket of large cap biopharma stocks rather than any ETF or a fund.
We still like SMID cap biotech stocks as trades but momentum is lacking and the Russell 2000 is weak. Moreover there was an. avalanche of small cap biotechs from 2020-21 IPOs all of which will need funding. We watch the XBI for strength but alas it is lacking and trading in a bear market range.
| Model | ||||||||||
| PORTFOLIO | ||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | ||||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | 1 year | Price | YTD | ||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | % Perf | 4/9/22 | %Perf | |||
| iShares NAZ Bio | IBB | 136 | 25 | 151.5 | 25.7 | 152.62 | -10.74 | 133.34 | -12.63 | |
| iShares Russell 2k | IWM | 163 | 10 | 196.4 | 18.3 | 222.45 | -11.09 | 197.87 | -11.05 | |
| Merck* | MRK | 80 | 5 | 81.77 | -10 | 76.64 | 21.72 | 87.68 | 14.41 | |
| United Health | UNH | 330 | 15 | 350.7 | 27.19 | 502 | 49.62 | 545.96 | 8.73 | |
| SPDR S&P Bio | XBI | 117 | 5 | 140.8 | 48 | 111.96 | -31.85 | 90.34 | -19.31 | |
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | 22.42 | 142.83 | 1.38 | |
| T.Rowe Hlth Sci | PRHSX | n/a | 5 | 99.65 | n/a | 104 | -0.95 | 97.65 | -6.18 | |
| iShares U.S MedT | IHI | 50 | 10 | 54.83 | 65.85 | -10.53 | 62.08 | -5.73 | ||
| Tracking Comp | COMP | |||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | -50.81 | 43.62 | -28.77 | ||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | -29.12 | 16.61 | -14.16 | ytd | |||
| Fido MEDtech | FSMEX | 76.15 | 83.18 | -6.25 | 72.06 | -13.37 | ytd | |||
| DOW | DIA | 310 | 363.3 | 3.65 | 347.37 | -4.39 | ||||
| S&P 500 | SPY | 379 | 475 | 9.56 | 447.57 | -5.77 | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | 4.2 | 349.15 | -12.24 | ||||