Biotech Stocks are Stalled -Until we get more News and M&A
- On Sep 30 the XBI up 26.1 % YTD, dropped out of the rising channel at a price of $157, followed by heavy selling on OCT 6, closing at $150.90. Three up days brought the XBI up to $153.77. RSI now is at 46, off a SEP 30 high of 73.
- Around the same day on SEP 30, the IBB up 22.35% YTD, fell below the upward channel low of $210, then sold off la bit lower but recovering to the SMA 50 value where it is now at 206.49. RSI fell from 80 to 50.74.
- The beast of the group the ARKG up 77% YTD, rose in a pretty narrow channel up from MAY 20 until the big sell-off on OCT 6 with good volume closing at $51.75. RSI fell from the 70s to 51.98 at Friday’s close.
Biotech stocks in general have been strong performers in 2026, beating the major indices beginning in early JUNE. The major theme behind the outperformance has been genomics and Precision Oncology. For the next few months there is expectation that the M&A trend will continue as larger biopharma companies acquire technology and products at various clinical stages to bolster their pipelines. Recently, for example we have seen the following deals:
- TEMPUS collaboration with Merck and Moderna on mRNA for Melanoma and other cancers.
- Viatris boosts pain drug portfolio with Pacira Sciences acquisition.
- Biomarin acquiring Alesta Therapeutics for $250M.
Biotech stocks come in many flavors and sizes from large cap biopharmas like Abbvie and Merck , technology platforms like MRNA vaccines, novel oncology drugs Revolution Medicine (RVMD) for treatment of pancreatic cancer and broader application of DNA sequencing for cancer diagnostics. A core position in any biotech portfolio should be Large Cap Biopharma. Here are some of the widely held companies:
| COMPANY | TIcker | P | Mkt Cap | % YTD | RSI |
| $B | |||||
| Abbvie | ABBV | 276.47 | 488 | 21 | 71 |
| Amgen | AMGN | 414.87 | 2224 | 26.7 | 55 |
| Gilead Sciences | GILD | 151.17 | 187 | 23 | 59 |
| Johnson and J | JNJ | 261.44 | 630 | 26.3 | 46.7 |
| Eli Lilly | LLY | 1179 | 1110 | 9.73 | 5.2 |
| Merck | MRK | 145.6 | 359 | 38.3 | 51 |
| Pfizer | PFE | 28.28 | 161 | 13.57 | 55.8 |
| Vertex | VRTX | 510 | 129 | 12.5 | 45.6 |
We recently added to Biogen (BIIB) to our portfolio. BIIB has an RSI of 56 and an analyst rating of 1.9 (buy).
- THE S&P 500 Equal weight (RSP) up 11.6% YTD, still lags the market weight (SPY) SPDR S&P 500 up 14.06%. Bbecause of th larger market caps of AI technology stocks/
One of the leading Health Science and Technology Funds we hold is the T.Rowe Price (PRHSX) that shows a good balance of large and SMID cap biotech holdings and is up about 30% over one year.
We still believe SMID biotech stocks can break out to new highs before the end of the year, but we need momentum from some of the leaders for example: ILMN, NTRA , XNCR or a re-acceleration in the XBI or the Russell (IWM) 2000 which has stalled up only 13.34% YTD., and lower than the SMA 20 and SMA 50 averages. On Friday we bought into the IBB because of overweighting of larger cap stocks.
For Momentum to come back to SMID biotechs we probably need to see money coming out of AI and technology stocks (XLK) up 36% YTD and in to Healthcare stocks ( XLV) up 10.8% YTD.
