Update-1 SMID biotech movers today-Morgan Stanley Healthcare presentation– from our Focus Trading List:
Many of these stocks are in the Cathy Wood managed ETF (ARKG). A green screen day in GENOMICS. We are long all of them.
- Adaptive Biotechnologies (ADPT) up 7.67% to $27.
- Cryoport (CYRX) up 2.19% to $16.31. new trade
- Guardant Health (GH) up 4.65% to $175.65.
- Natera (NTRA) Inc. up 2.63% to $350.78.
- Illumina (ILMN) Inc. up 6.76% to $222.29; a recent upgrade by UBS.
- TEM (TEM) up 10.67% to %68.85. Funding for whole genome subset in cardiology. new trade
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Healthcare Sector After A Tough Week, in a Market with Many Crosscurrents
- Large cap biopharmas were hit by clinical trial failures from Amgen, AstraZeneca and Novartis; PPH down 2.69% WTD up 7.73% YTD. Our best mutual fund pick FBIOX was down only 0.98% MTD., up 7.9% YTD.
- The XLV was down 2.16% WTD, up 8.37% YTD to the $165 level off the 2026 peak around August 19 of $176. Healthcare providers led the sector. HCA was up 4.25% but UNH was down 3.42%, WTD.
- IHI US Medical Devices was down 5.62% WTD, and 18% YTD, very weak since Aug19. My top holdings are MDT, ABT and BDX. And MDT looks better.
The only good news this week is we are about halfway till the end of the month and closer to some good earnings reports or M&A both of which have been the mainstays of this market. Ocasionally we get reminded that drug discovery and development has unseen risks, but it is still the best area for investing in healthcare right now. Our top holds are ABBV, GILD, LLY and VRTX, as well as FBIOX. JNJ is one of the top large caps up 28.69% YTD. Most were in the green screen mode today.
(Shifting sentiments on the AI trade: read all about possible disruption in TECH but NOT in this Healthcare and Biotech blog.) The XLK was down 1.8% yesterday.
We nibbled on a little Biogen (BIIB) over the past week. The stock shows good technicals and momentum up 6.5% MTD and 235 YTD with good long term prospects in neurology. The Company recently announced with Stoke Therapeutics, an IND with PH 1,2a clinical data for Dravet Syndrome with a drug called Zorevunersen, an anti-seisure medicine. Their trials on AD have given us a lot of data on Tau and amyloid but no breakthroughs yet. The market cap at price of $217 for BIIB is $32B, with a FWD PE of 13,.2 a P/S of 3.3 and a P/FCF of 11.9. Analyst recommendation is a buy at 1.86.
SECTOR WATCH- Energy, IT and Healthcare are the ones to watch.
Except for the gains on Friday it was a down week for all sectors but energy and InfoTech with the XLE up 0.73% WTD and 6.73% MTD with a good RSI of 66,and at $654.53/sh. with new highs for one year. Drone attacks against the Saudi East-West pipeline YTD.
We expect technology shares to be volatile this week as many Politicians and Tech Executives are calling for a pause in AI and with protests mounting for the Data center buildup. Diesel prices hit a new high at $6.20+, but Trump puts the blame on Ukraine. Maybe the AI issue can be tempered in an upcoming meeting between XI and Trump this month.
Treasury yield continued to push higher before a pause on Friday with the 10 year Tsy Notes around 5.%. The market is catching up quickly with the rising rates with anticipation of te FED raising rates call so don’t be surprised if you hear this narrative.
SMID CAP Life Science
SMID biotechs were a bit weak last week with the equal weight smaller cap XBI down 3.79% for the week at $157.80 but still up 29.25 % YTD. The IBB was down 3.45 WTD and is up 21.23% YTD. We prefer this sector of biotech currently because these smaller companies represent innovation and are likely to have M&A momentum.
Here are some of our top biotech picks that are still in the money after peak values around August 18:
AMRX, ADPT, COGT, NTRA, ILMN, WAT, XNCR. We will summarize performance at the end of the week.
From this biased vantage point it looks like money flows into biotech and healthcare when tech stocks weaken or get volatile.
But we will need some help from the Morgan Stanley Healthcare Conference this week, especially Thermo Fisher Scienific (TMO) up 2.5% in early trading.