Update-2 11/4/20…Huge rally in Biotech and Healthcare -Call it the gridlock rally.
Biotech Green Wave?
As we picked them on Sunday evening the large cap biotech and healthcare stocks soared. Looks like the big stimulus trade has waned hurting industrials and materials so we are back to biotech, healthcare and technology as key sectors to overweight. With election results uncertain the perception is that politicians won’t go after biotech and drug stocks and maybe big cap tech is also off the political hook.Moreover the basic pandemic theme remains intact i.e. the biopharmaceuticals are part of solution to the crisis.
- IBB up 6.1%, XBI up 6.32%, XLV up 4.435.
- Small caps lag, XLI down 1%.
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11/3…Strongest day in One Month -NAZ up 1.85%, IBB up 1.77% , XBI up 2.71%. Does market want stimulus as sectors shift slightly?
- Recent stocks to buy: ABBV down 0.33%, ABT up 1.94%, MRK up 0.27%.
- Coronavirus movers: AZN up 2.135,CVAC up 3.19%, GNMK up 4.195, QDEL up 3.56%, MRNA up 2.945, TDOC up 2.54%. Regaining momentum.
- GWPH up 21% on Revenues $137M, Phase 3 MS Trial.
- Veracyte (VCYT) up 9.2% on upside revenue surprise.
- XLV lags XLI up 2.95%.
- IWM up 2.84% that is good.
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Healthcare stocks to Buy After the Pre-Halloween Sell-Off
- Decent earnings with guidance but geopolitics is uncertain.
- Broad sell-off across all sectors after a nasty week.
- Macro-driven market means we look ahead past election chaos to 2021.
Healthcare stocks to buy for future good news and seasonality factors. If you look below at our healthcare tracking portfolio you can see that the sell-off offered few clues as to what is next.The IBB down 3.43% for the week outperformed many market indices including the S&P and NASDAQ . Going forward we expect healthcare stocks to fare better than tech stocks in a volatile market. Our best performing portfolio YTD has been speculative smaller caps so look to the Russell 2000 (IWM) and (IWO) for direction. If you are underweight healthcare here are a few individual large cap dividend stocks to consider. Keep in mind these healthcare stocks are positioned for 2021 and may be volatile through the next few weeks but all earnings are out.risk: Valuations are on the high side and debt is high.
Abbott (ABT) Abbot Labs up 0.11% on Friday to $105.11. Nice play on coronavirus testing with $900M in COVID testing. Earnings beat and new guidance.Upside potential (10/22 earnings beta with Q3 revenues of $8.83B) in medtech cardiology and diabetes -glucose biosensor. Full year 2021 EPS guidance of $3.55.DIV 1.44%.
Abbvie (ABBV) up 5.49% on Friday to the $85 level on a raised profit forecast on Q3 Revenues of $12.3B with beat from Immunology franchise ; look for BOTOX cosmetic up 8% with bet on recovery longer term.Late stage pipeline opportunity for Skyrizi and Rinvoq. DIV 5.55%.
Merck (MRK) down 0.90% on Friday to $75.10 lifts outlook on oncology demand, COVID vaccine in the pipeline.Earnings beat on 10/27, KEYTRUDA sales grew 22% to $3.75B. Animal health up 12% to $1.2B. DIV 3.24%.
Mini-Healthcare and Biotech Portfolio
| PORTFOLIO | ||||||
| Stock/ETF | Ticker | Price 10/25 | Weight | P 10/31 | % Perf week | |
| iShares NAZ Bio | IBB | 136 | 25 | 130.62 | -3.43 | |
| iShares Russell 2k | IWM | 163 | 10 | 153.09 | -4.05 | |
| Merck | MRK | 80 | 10 | 75.21 | -5.1 | |
| United Health | UNH | 330 | 25 | 305.14 | -5.46 | |
| SPDR S&P Bio | XBI | 117 | 5 | 112.77 | -2.96 | |
| Healthcare SPDR | XLV | 108 | 25 | 101.66 | -4.61 | |