Update-2 4/17/26…When the market is up because oil is down and the Straits may be open soon what can we say? A green screen day in SMID biopharma.
- Added to Illumina (ILMN) long at $132,
- Bought options in ABT stock believing that stock will come back by year end well over $105.
- Small cap rally intact with IWM up over 2% to $275 12% YTD, bought ABSI at $3.30.
Update-1 4/16/26… ABT stock hit lows of NOV 2023 at the $95 level.. Abbott beat estimates and reaffirmed outlook, but faces problems in business segments especially Nutritional ($2.2B) sales down 6% and core molecular and rapid diagnostic test dropped 7.4%. Sales for flu and COVID test were weak, but EPS forecasted at $5.38-5.58 including dilution from Exact Sciences merger of $0.20. The Company is making the big $21B bet on a new rapid testing platform from Exact to create a new high growth market in oncology where it expects sales full year sales growth of 6.5%-7.5%, from the 2025 base sales of $812 M WW. Core laboratory diagnostic sales for 2025 were $2.18B. Medical device sales were up 13.4% to $5.54B including cardiology and Diabetes care. Q1 Revenue was $11.18B, an 8% % YoY growth.Full year outlook is maintained for sales. DIV is 2.6%.
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M&A Will Drive SMID Cap Biopharma
- Healthcare Sector is lagging, Technology sector is coming back in latest month as we enter 3rd month (beg. 2/28/26) in War with Iran.
- Biotech M&A is expected to continue throughout 2026 with 14 deals over $500M in Q1.
- The most promising sector for in Healthcare for 2026 should be SMID Biopharma, with seasonality strength.
The War with Iran has dominated market news over the past year driving the XLE up 37% YTD but slowing in April peaking on March 27 down 1% over the past month. Since late March technology stocks (XLK) has showed gains picking up 4.88% over last week and 2% for the month. Some analysts believe the IT and technology sectors driven by AI will be more insulated from the War and some bargain available after the recent correction with PEs in the low 20s. Industrials (XLI) and Materials (XLB) have also been strong YTD up over 10%.
Healthcare stocks have been a laggard as we wrote in a recent post with the XLV down almost 5% YTD. But even some of the strongest large caps have had losses recently, AMGN ,BMY and PFE with strong dividends still show decent gains YTD. The two biotech ETFs we trade and track are the large cap weighted IBB up 3.7% YTD at $175 and the equal weighed XBI up 10.5% YTD at $134. March 30 looks like a good bottom for biotech with the XBI at $118. Some our long term holdings are : AXSM EYPT CGOT XNCR
There are other important sectors of healthcare with stocks that you probably own like Abbot in MedTech and United Health in Providers; and both ETFs show the underperformance; IHF down 7.42% , with weighting of 22.5% UNH and the IHI down 14%, with weighting in 3 MedTECH stocks (ABT, ISRG,SYK- long ABT, ISRG
Genomics stocks have led the way for innovation in biotech with new diagnostic tools for Precision Oncology and growing application for DNA sequencing.Many of these stocks are in two funds: Ark Genomic Revolution (ARKG) down 3.79% YTD and T.Roe Price Health Sciences (PRHSX) down 3.63% YTD. We own many of the stocks in these funds like Guardant Health andThermoFisher (TMO), but as a group the diagnostics and tools area but it has been better to be a stock picker than a fund owner. Remember too in 2025 you could just two funds : FBIOX and XBI to capture gains of 30%+. Some 4+% movers today in this Tools/Dx sector from our trading list that we own : ADPT ILMN PACB QDEL TEM VCYT etc. The sector had been doing well but maybe too fast and furious so great for trading if you got in early.
JNJ earnings came out this morning with a beat and a raised outlook and the stock was up 0.62% at $239 in early trading, but up 15.44% YTD. More later on a “slimmed down” JNJ focused in biopharmaceuticals and medtech.
So if you want more alpha or beta in healthcare a good place to start is SMID biotechs with a position in IBB or XBI. If both the IWM and ARKG is running strong then you’ll know a momentum rally is happening. Yesterday for example,Revolution Medicines (RVMD) anounced results and survival benefit from a Phase 3 trial for metastatic Pancreatic RAS addicted-cancers. RVMD stock soared 41% to $136.30. Today the stock is up another 4% to $142 in early trading at 11:30 a EDT. At the current price (4/14/26 $152.54) of RVMD shares, the market cap is $30.23B with about $10 in cash/share.