Something Happened
Update-4 11/16/24…I hate to write bearish copy but its been a bad week and the market looks pretty negative right now. What am I a day trader? Sheesh. Healthcare stocks are getting pummeled with the XLV down 2.98% MTD and up only 4% YTD! The XBI is DOWN 7.53% MTD falling from a high of $105.32 around Nov 7 to $91.83 now. It’s only up 2.84% YTD. I’ll write more this weekend but we are fighting not only some bad news from a few of our best companies (ABBV and LLY) but higher TSY yields with the ten year up to 4.428% and Powell “thinking out loud “that the economy is going well and may not be needing so many cuts? Now layer on top of that the politics of TRUMP nominees intent on disrupting the FED, the NIH and healthcare system in general. Hold on folks.
Update-3 11/14/24….Red screen day. XBI down 3% to $96.96 -sold at 98, SMID stocks are too volatile to trade. Even large cap healthcare stocks are down with the XLV down 1.57%, up only 7% YTD now. at $144+==no longer a defensive group.
Update-2…11/13/24…2P EST..Bought Guardant Health (GH ) at $25 after EXAS reported , added to trading list, bought more ABBV at $170, bought RNA at $51+. added to SUPN at $37+, VCYT very strong near 40. XBI is flattish at $100.
- Another winner from our trading list Natera (NTRA) up18% today to $140. Product revenues up 64% YoY for Q3.
Update-1 ….11/12/24…Is the nascent biotech rally over already? The SMID caps are flashing red after the large caps took a hit. What’s going on? Has the election changed the calculus of healthcare costs and ROI of drug R&D? Hold on let’s get through 2024 first.
Healthcare turning bearish?
Playbook for the Biotech Bull Run
- Pick a basket of Large Cap biopharma stocks: ABBV, LLY, MRK, PFE, VRTX. (see updates on ABBV and BMY).
- Buy a biotech fund (FBIOX) and the XBI.
- Trade SMID biotech stocks with the XBI. More difficult and with increasing volatility.
If you have been reading our posts you know that some of the big biotech winners have taken a hit after earnings : LLY, MRK and REGN. But ABBV,GILD, LLY, and VRTX remain among the top performers. Three of our top picks have sold off but are in a value buying range: LLY, MRK, PFE. We are still looking for PFE get some good news and trade above $30 with a dividend above 6%.
What is surprising over the past quarter is the volatility among the large caps ABBV gapped up and AZN gapped down on pivotal trading days over the past month. BIIB and GSK continued a downward trend for many months. And Regeneron a top pick for many years took a big revenue and earnings hit from Eylea competition. JNJ remains stagnant as it restructures into a MEDTech and BIOpharma powerhouse while it extricates itself from its endless talc litigation. What we also need to factor in at some time is the TRUMP administration healthcare polices.
**BUT today to show the volatility of this once staid group ABBV was down 12.57% to the $174 level on Phase 2 results for its schizophrenia drug recently acquired in the $8.7B Cerevel deal. BMY gained 10.49% on their schizophrenia drug the recently received FDA approval.
Another option is to buy a biotech fund like Fidelity Select Biotech Portfolio (FBIOX) that is weighted toward large caps: ABBV, GILD, LLY and is up 26% YTD.
SMID CAPs- Life in the Fast Lane with Momentum Stocks
Our SMID cap trading list was developed early in 2024 and rests have been outstanding. Some of the recent performance was outlined in posts we did over the last two weeks. Today there were several big winners: ADPT, CRBU, CRSP, PACB, RZLT, TEM, VCYT etc. But in light of recent big moves and volatility we would suggest a more measured approach to trading these SMID caps.
LARGE CAP BIOPHARMAs Metrics
Data as of FRIDAY NOV 10, 2024.
| 1/15/18 | 3/31/23 | 11/1/19 | 10/8/2023 | 2024 | YTD | FWD | Analyst | % | 1 yr % | % | ||||
| Company | Ticker | Price | Price | Price | Price | PRICE | 1 mo. | |||||||
| 11/10/24 | % Perf | P/S | PE | Recom | Div | |||||||||
| Abbvie | ABBV | 100.000 | 159.37 | 81.75 | 148.23 | 199.5 | 28.73 | 6.32 | 16.46 | 1.78 | 3.09 | 40.46 | 3.36 | gap u |
| Alexion*(ALXN) | ALXN | 123.000 | 182.5 | 109.38 | – | 40.33 | n/a | 4.56 | 9.38 | n/a | AZN | |||
| Amgen | AMGN | 185.000 | 241.75 | 221 | 263 | 325.28 | 12.94 | 5.47 | 15.68 | 2.2 | 2.8 | 19.04 | 2.39 | |
| AstraZeneca* | AZN | 35.000 | 69.41 | 40.34 | 67.42 | 64.5 | -4.25 | 4.07 | 13.76 | 1.93 | 2.41 | 1.51 | -16.11 | gap d |
| Biogen | BIIB | 336.000 | 278.31 | 299.2 | 263.25 | 173.04 | -33.13 | 2.72 | 10.22 | 1.75 | – | 25.32) | -5 | low |
| Bristol Myers* | BMY | 63.000 | 69.31 | 57.16 | 56.66 | 54.14 | 5.52 | 2.29 | 7.68 | 2.85 | 4.42 | 3.28 | 3.16 | |
| Celgene* (BMY) | CELG | 106.000 | n/a | 108.53 | – | 77 | n/a | 4.69 | 8.7 | n/a | ||||
| Gilead Sci | GILD | 79.000 | 82.97 | 61.69 | 74.74 | 96.57 | 19.2 | 4.19 | 12.96 | 2.09 | 3.18 | 23.96 | 13.33 | high |
| GlaxoSmithK* | GSK | 38.000 | 35.58 | 45 | 36.65 | 36.29 | -2.08 | 1.86 | 8.28 | 2.5 | 4.3 | 3.51 | -4.55 | low |
| Johnson&J* | JNJ | new | 155.47 | -0.81 | 4.23 | 14.69 | 2.18 | 3.01 | 3.41 | -2.64 | ||||
| Eli Lilly | LLY | 85.000 | 343.42 | 113 | 565.22 | 831.54 | 42.65 | 20.14 | 36.76 | 1.62 | 0.66 | 34.31 | -8.99 | rsi low |
| Merck | MRK | 59.000 | 106.39 | 78 | 103.88 | 102.92 | -5.6 | 4.21 | 10.94 | 1.58 | 3.05 | -1.42 | -5.16 | low |
| Pfizer | PFE | 40.8 | 33.13 | 26.72 | -7.19 | 2.45 | 9.21 | 2.23 | 6.31 | -13.3 | -8.43 | rsi low | ||
| Regeneron | REGN | 367.000 | 821.67 | 310.48 | 836.57 | 828.42 | -5.68 | 6.61 | 18.32 | 1.82 | – | -0.68 | 6.13 | low |
| Vertex | VRTX | 158.000 | 315.07 | 196 | 360.62 | 516.74 | 27 | 12.89 | 27.46 | 1.97 | – | 37 | 12.59 | high |
| 3/31 | 11/19 | 10/7/23 | 11/10/24 |
%YTD
|
1 yr | 1 mo. | Trend | |||||||
| XBI | 76.21 | 93 | 72.23 | 104.18 | 16.68 | 50 | 7.29 | u | ||||||
| IBB | 129.16 | 119.65 | 122.48 | 148.85 | 9.57 | 25.63 | 4.09 | u | ||||||
| FBIOX | 15.63 | 20.26 | 15.47 | 22.47 | 26 | 50.2 | 6.59 | u | ||||||
| PRHSX | 87.75 | 79 | 86.37 | 99.55 | 13.25 | 17.26 | 0.83 | u | ||||||
| XLV | 129.46 | 121.11 | 128 | 150.18 | 10.12 | 17.1 | -1.06 | – | ||||||
| XPH | 41.01 | 39.47 | 39.05 | 48.05 | 15.45 | 31.14 | 9.35 | u | ||||||
| UNH | 472.59 | 252 | 524.81 | 615.81 | 16.97 | 14.73 | 5.89 | u | ||||||
| QQQ | 320.93 | 201.23 | 364.7 | 514.14 | 25.55 | 37.86 | 5.08 | u | ||||||