Update-1 Nov. 8..Volatile election day favors the bulls. IBB and XBI both up over 1%. TSY yields down and dollar down. UNH up 1.48%, Junior metals are hot with gold and silver. Crypto spat rattles markets.
- Amgen (AMGN) leads the way up over 5% to $290 level a record high. New clinical dat impresses Beats on earnings $4.01 up 30%,but flat revenues.
- Large cap biopharmas in the green.
- Gilead Sciences (GILD) continues run above $82. Wins patent battle against BMY, good value with Div 3.58%, Fwd PE 12.58.
Biotech Stocks Ruffled During Past Week
It was another choppy week in the market as again the focus shifted to the FED and for the parsing of words in Powell’s press conference. Any good earnings and product news got lost in the FEDspeak of inflation and rising rates. More FED focus and MACRO is on for the coming week as the CPI data is coming Thursday and the Univ of Michigan Consumer Sentiment Index on Friday. Election results are coming on Wednesday adding to the turmoil.
Healthcare stocks have cruised through the flak outperforming the market. The XLV was down only 1.54% for the week and is down only 7.15% YTD. United Health (UNH) was hit harder down 2.37% for the week yet up 7.18% YTD. Demand for healthcare services and products are growing or relatively stable in an uncertain economic environment.
We are still bullish on the biotech sector because of robust product pipelines, top line revenue growth and M&A potential. Biotech CEOs have more strategic options to upgrade their product portfolio because of the huge diverse market potential.WIth the explosive technological capabilities of molecular medicine innovation is inevitable. But lately because of higher interest rates financing options are more limited . The IBB was down 1.03% for the week (despite a spike after FED release but before Powell talk) and down 15.91% YTD.The more speculative XBI was down 4.54% for the week and 28.58% YTD. The XPH was down 1.89% for the week and down 9.92% YTD.
Despite the FED uncertainty there was plenty of action in the life science sector last week.
- Two stocks on our SMID Focus List were up last week. Veracyte (VCYT) was up over 20% to the $24 level on financial results that showed toppling revenue growth to $75.6M. And Quidel (QDEL) recovered to the $90 level after FEDspeak day despite lukewarm financial results.The business combination with Ortho now has combined revenues of $783.8M.
- Moderna (MRNA) was up 7.4% on Friday to the $158 level on positive demand for omicron targeted boosters and rumors of a China deal. BNTX was up over 12% to $154.31 for the week.
- Medtech as tracked by the (IHI) US Medical Device ETF is trying to recover from the recent bottom at the $46 level. Another medical equipment ETF SPDR S&P (XHE) shows a similar pattern trading near its 2022 low at $84.
- Medtech got a boost from the JNJ/Abiomed deal but our best trade of the week was Hologic (HOLX) up from $65 tp $75 level on Friday. We should have added HOLX to our focus list.7 analysts have a strong buys on Hologic but the big move has been made. Hologic is a strong hold as a leader in women’s health and molecular diagnostics.HOLX has a PE of 14.0, a P/S of 3.53 and a P/FCF of 6.39.
It was a difficult week for portfolio managers because of MACRO drivers and rising rates. Sector rotation is becoming a weekly roll. Unusual strength this week was in commodities and metals with copper up 7.17%, silver up 8.58% and gold up 2%. Energy continued to be the leader in 2022 with the XLE up over 30% YTD.