Update-1 nice broad biotech rally on stimulus hopes with biotech now seen as possible solution
- XBI up over 3%to $93 handle .
- IBB up over 3% o $129 handle; Roche (RHHBY) up over 3.5%.
- DX and tools running along with microcaps; TMO deal for QGEN helps MO.
Innovation Drives Biotech Stocks
Biotech Stocks Catch Bids-Is it time to nibble on selected life science stocks?
Fear dominates the markets
Biotech and Life Science stocks showed some green on Friday and some themes emerged that are positive were it not for the fear factor and undercurrent of U.S. politics confusing the real situation. (Also keep in mind that drug pricing reform is a bi-partisan agenda.) But we are in a period of uncertainty where momentum is gone from the upside and volatility distorts the trend lines. Concerns remain about the pharmaceutical supply chain with many plants in China.
Here are some positives for the longer term.
- Look for green stocks in large cap biopharma with dividends and potential for growth and innovation . ABBV BMY RHHBY GILD.
- At some point mid-cap biopharmas will be good buying opportunities: ALNY, BMRN, INCY.
- Believe that the U.S. Healthcare system can attack the epidemic better than most countries.
- Life science stocks are more insulated from any potential economic downturn from COVID-19.
Some stocks are re-emerging and show good trading opportunities for re-balancing your portfolio. But keep in mind that earnings estimates will be coming down and we are still in a period of uncertainty and wild day-to day volatility. Momentum investing is a two-edged sword.
The best biopharma performance in 2020 was Regeneron (REGN) up 19% YTD to $444.57 yet flat for a very bad week. One of its major competitors (Novartis) for their blockbuster ophthalmology drug EYLEA had side effect issues.
The IBB was down 5.3 % for the week and is now down 4.76% YTD.
Some stock movers recently support the overall themes of targeted therapy and molecular medicine
Large cap biopharma stocks are a good place to look for new buys because of their pipelines and wrote potential in immuno-oncology, infectious disease and inflammatory diseases. ABBV BMY GILD RHHBY
Gene therapy may be an area to target new money for breakthrough therapies BMRN CRSP EDIT NTLA.
Molecular Tools and Diagnostics – Guardant Health (GH) $86.96, Illumina (ILMN) $265 and Veracyte (VCYT) $24.7 all companies have strong capabilities in genomics and diagnostics.
Some of the more speculative names in biotech are difficult to trade as milestones are difficult calls without clinical data. Examples include Co-Diagnostics (CODX), Moderna (MRNA) and Vir Biotechnology (VIR). But in a strange way some of my more speculative micro-caps are up for the week.
Update later today,