Update-2 …5/13 Many analysts see today’s sharp upside action as an oversold rally from 2022 lows.The highest risk stocks soared along with large cap tech stocks. NASDAQ was up 3.75%,S&P up 2.3%, DOW up 1.42%. To some extent this shifted action away from more defensive healthcare up only 1% today but down 0.89% for the week. The riskier biotechs soared today with the XBI up 5.72% today despite being down over 2% for the week. The IBB was up 3.37% today and flat for the week.
Our favorite biopharma stocks were up today: REGN SGEN VRTX but ABBV BMY and MRK were flat. If your higher risk small cap growth stocks were weak today you should consider selling .
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Update -1 5/11 11a EDT Early Movers: Healthcare and Biopharma stocks up.BMY up 1%, LLY up 2.65%, MRK up 2.8%, UNH up 1.7% XLV up 1% but no follow through on XBI from yesterday down 2%. Market mixed on April CPI slowing to 8.3% from 8.5%. Pfizer (PFE) flattish at $49 after $11.6B acquisition of Biohaven for migraine drug. We need more M&A in biotech.
Hiding from Volatility with Healthcare Stocks
- Risk-off market favors predictable earnings and yield like large cap biopharmaceuticals.ABBV, BMY, MRK.
- Valuations matter with interest rates rising favor defensive sectors. UNH,XLV.
- Small cap biotech continues to decline.The XBI is down 37.36% YTD.
We have made the transition from momentum and thematic stocks to value and yield. Amidst global uncertainty the markets have been wracked by inflation and rising commodity prices. Small cap growth plays in biotech have to wait for the macro turmoil to subside and valuations to compress closer to actual cash value.
The top performing large cap biopharmas over 52 weeks that we follow are: BMY LLY MRK ABBV and VRTX .YTD leaders are: BMY, MRK, VRTX and ABBV. Regeneron (REGN) is down slightly YTD so one might say that their earnings disappointed since their stock hit a high before earnings of $747 in early April?!
As we mentioned in our last post a diversified portfolio with healthcare, energy and staples provided some protection from the turmoil.
PRICES ARE AS OF 5/7/22
| 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 | 5/7/22 | %Perf | |||
| iShares NAZ Bio | IBB | 136 | 25 | 151.5 | 25.7 | 152.62 | -23.74 | 113.17 | -25.87 | |
| iShares Russell 2k | IWM | 163 | 10 | 196.4 | 18.3 | 222.45 | -17.97 | 182.58 | -17.92 | |
| Merck* | MRK | 80 | 5 | 81.77 | -10 | 76.64 | 19.1 | 88.69 | 15.33 | |
| United Health | UNH | 330 | 15 | 350.7 | 27.19 | 502 | 20.4 | 499.62 | -0.5 | |
| SPDR S&P Bio | XBI | 117 | 5 | 140.8 | 48 | 111.96 | -44.2 | 70.13 | -37.36 | |
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | 5.32 | 129.78 | -7.89 | |
| T.Rowe Hlth Sci | PRHSX | n/a | 5 | 99.65 | n/a | 104 | -15.17 | 85.24 | -18.1 | |
| iShares U.S MedT | IHI | 50 | 10 | 54.83 | 65.85 | -7.15 | 53.76 | -18.36 | ||
| Tracking Comp | COMP | |||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | -59 | 32.72 | -46.57 | ||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | -36.72 | 13.39 | -30.8 | ytd | |||
| FiIDO MEDtech | FSMEX | 76.15 | 83.18 | -19.62 | 59.94 | -27.94 | ytd | |||
| DOW | DIA | 310 | 363.3 | -4.76 | 329 | -9.43 | ||||
| S&P 500 | SPY | 379 | 475 | -1.84 | 411.34 | -13.39 | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | -6.71 | 309.25 | -22.27 | ||||
| Top Biopharmas | ||||||||||
| Abbvie | ABBV | 31.66 | 152.83 | 12.87 | ||||||
| Bristol Myers Sq | BMY | 18.94 | 76.67 | 22.97 | ||||||
| Merck | MRK | 19.1 | 88.39 | 15.33 | ||||||
| Regeneron | REGN | 24.94 | 623 | -1.34 | ||||||
| Vertex | VRTX | 19.13 | 253.93 | 15.63 | ||||||
| oblate |