FOCUS on SMID biotech stocks.
Update-2 ..more rotation out of tech and large cap biopharma and healthcare (UNH, XLV still weak) into value and cyclicals; energy very strong we’ll see. We still prefer SMID in biotech per our Life Science Portfolio. Today XBI was flat at $88 but good gains in EVH up 0.85% PACB up 2.57%, SUPN up 2.49%, VCYT up 2.44%.CRSP weak.
Added to GILD and PFE last week as value plays.
And you know by now that large cap biopharmas are being hit by Medicare Pricing issue with Merck (MRK) filling a lawsuit challenging US Government.
Update-1…6/5/23 at close…AAPL at $184.95 and S&P 500 at $4296 both hit YTD highs then sold off slightly. Broad rally fades as well. More defensive biopharma stocks are winners:AMGN, LLY, MRK , PFE, REGN. Large cap strength in AMZN GOOGL, TSLA. Life Science Portfolio winners: CYRX, EVH, GERN, PACB, SUPN. IBB and XBI slightly green.
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Market Mixes It Up With A Broad Rally
- Bull Run in Technology Shares Bring in Laggards-financials, Industrials, healthcare.
- MACRO Narrative Improves With Debt Ceiling Bipartisan Deal and Expectations of a FED pause.
- Small Caps Lead the Way in Technicals-Recovery Underway.
A major concern for the market was modulated last week with a bipartisan debt deal. Then on Friday the jobs report exceeded expectations signaling strong hiring while other data showing less inflation. Major stock indices were strong boosting the DOW and cyclical stocks. Some called it a “Goldilocks” scenario. Many analysts have pointed to the divergent performance of the top 7-10 large cap NASDAQ stocks so a broad rally is important in the context of the U.S. economy. The NASDA-100 is up 33% YTD!.The risk of recession may be lessened in the intermediate term.
Biotech stocks remain sluggish but the longer term outlook for breakthrough therapies-gene therapy, obesity, CNS,RNA-remain positive. ASCO reports and data are streaming in this week offering support to new products in immuno-oncology. But we are way off the 2021 highs in the bellwether XBI so stock picking is important. and some bis underlying concerns remain such as drug pricing legislation (Inflation Reduction Act), slowdown in M&A due to FTC posture and higher interest rates (2 yr treasury yields rose to 4.501%). With yields of 5%+ available why risk new equity plays?
XBI vs IWM vs XLV
SMID Cap stocks were leaders last week with the IJR up 3.07%, the IWM up 3.26% and the IJH up 2.57%. These moves were more reflected of the general market but did help biotech momentum like the XBI up 3.45% to $86.43 for the week. Our SMID Life Science Portfolio initiated on 1/20/23 saw some big winners: ABOS, EVH, GERN, PACB, and VCYT. With Wm Blair, Jeffries and Goldman-Sachs Healthcare Conferences this month for updates some of these stocks: PACB, QDEL, SUPN, VCYT. Caution as volatility is high.
| P 1/20/23 | % Perf | 2/4/23 | 6/3/23 | Perf | |||||||
| Company | Ticker | $ | P | % week | % Perf | P | Week % | YTD % | 1 yr | ||
| Acumen Therap | ABOS | NEW | 5/8/23 | 5.29 | 5.17 | 6.6 | 4.26 | 46.46 | |||
| CRSPR Therap | CRSP | 49.61 | -25 | 55.27 | 4.72 | -15 | 65 | 1.8 | 59.9 | 6.56 | |
| Cryoport | CYRX | 21.75 | -42.34 | 25.24 | 9.41 | -33 | 19.64 | 2.99 | 13.2 | -26.63 | |
| Evolent Health | EVH | 30.83 | 13.74 | 31.96 | 2.21 | 17.91 | 31.03 | 6.67 | 10.51 | 1.5 | |
| Geron | GERN | 3.19 | 9.24 | 3.22 | 3.59 | 10.27 | 3.6 | 15 | 48.76 | 170.68 | |
| Hologic | HOLX | 79.66 | 22.41 | 84.68 | 2.28 | 30.14 | 79.06 | 0.7 | 5.68 | 4.04 | |
| Pacific Biosci | PACB | 11.29 | 55.68 | 11.58 | -1.7 | 59.67 | 13.49 | 12.7 | 64.91 | 140.89 | |
| Quidel/Ortho | QDEL | 88.13 | -11.56 | 89.7 | 3.93 | -9.98 | 86.16 | 1.7 | 0.57 | -6.94 | |
| Supernus | SUPN | 40.3 | 12.3 | 41.61 | 2.29 | 15.95 | 33.53 | – | -6 | 19.28 | |
| Veracyte | VCYT | 24.89 | 39.43 | 26.67 | 2.46 | 49.41 | 26.72 | 4.83 | 12.6 | 46.57 | |
| SPDR Biotech | XBI | 86.99 | 14.75 | 90.39 | 1.12 | 19.24 | 86.43 | 3.45 | 4.13 | 25.68 | |
| wildcard | |||||||||||
| Invitae | NVTA | 2.555 | – | 2.62 | 3.15 | 0.67 | 1.07 | -0.93 | -42.47 | -69.94 | |
| 6/3/23 | 1 yr | ||||||||||
| iShares CoreS&P | IJR | 97.06 | 4.3 | 2.56 | -5.74 | ||||||
| iShares Russell | IWM | 182.02 | 4.51 | 4.31 | -3.57 | ||||||
| iShares BIO | IBB | 128..98 | 1.69 | -1.76 | 10.85 | ||||||
| NASDAQ-100 | QQQ | 354.6 | 4.39 | 33.19 | 12.81 | ||||||
| HealthcareSPDR | XLV | 130.32 | 1.98 | -4.07 | (0..79) | ||||||
| Energy SPDR | XLE | 79.9 | 1.04 | -8.65 | -9.55 | ||||||
| T.RowePrice | PRHSX | 90.47 | – | 0.72 | 4.67 | ||||||
| iShares MED Dev | IHI | 50.43 | 1.79 | 2.78 | -1.04 | ||||||