Update-3 …ABBVIE (ABBV) beat with adj. EPS 2.46 earnings and revenues of $13.343B an increase of 4%,but tariff issues lurking., but I$10M investments will be made in U.S. Strong sales $6.264B of new immunology drugs Rinvoq and Skirizi an increase of 16.6%. EPS guidance raised too $12.09-12.29. “AbbVie’s first-quarter results were well ahead of our expectations and reflect an excellent start to the year,” said Robert A. Michael, chief executive officer, AbbVie. “The fundamentals of our business are strong and we continue to bolster our outlook with pipeline advancements and strategic investments. Based on the progress we are making, AbbVie is well positioned for the long term.”
REPORT U.S. Pharma tariff will raise Drug costs by $51B annually.
Update-2 …4/24—Rally off the bear market bottom continues with all three indices making big gains today: DOW up 1.3%, S&P 500 up 2.03% to 5484, NASADAQ up 2.74%. to 17.\,166 and even the Russell up 2%. Life Science stocks continued for the late Monday liftoff with another “green screen” day. The XBI was up 2.2% to $80.86 a 7.6% gain over 5 days well off the 4/8 lows of $69.80 on 4/8. Vey heavy volume indicates a lot interest in biotech despite te gloomy tariff backdrop. The IBB was also up 5.44% during this period.The XLV did not participate in this momentum rally. Our focus has been on SMID cap biotechs and they are less affected by the MACRO and we have made some nice new trades : RZLT, RYTM, and TEM while many of our holds remain strong : ADPT, CRMD, GH, and VCYT .The more balanced biotech IBB looks good in here as well.
- Merck announced Q1 results with $15.5B in sales a decline of 1% mainly attributed to CHINA with GARDASIL a 40% sales decline to $1.4B. KEYTRUDA sales grew 4% to $7.2B. Outlook for Revenues to be in range of $64.1B and $65.6B with EPS $8.82-$8.97 with a $200 M charge for tariffs.
- GILD beat with earnings but missed on revenues. ABBV reports tomorrow.
NIH grants plummeted by $2.3B. So where’s RFK Jr. on this?
Technology stocks were hot today because they were been down the most in 2025 but the XLK gained 3.73% today. GOOGL announced today and the stock soared after hours up 4.8%.Futures are up as of 7P EDT but we are not out of the woods yet as no Tariff deals have been announced with trans-Pacific shipments dwindling.
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Update-1…4/23 10 a EDT–broad market rally expecting talks on tariffs, policy shift imminent? S&P up 3%. BA up 5%.
Bear Market Rally Spurs Biotech Stocks-Major Indices were up over 2%.
- Biotech Tracker: IBB at $120.43 down 8.9% YTD, down 4.5% 1 yr. 5 yr low at $109.56; XBI at $77.64 down 13.79% YTD, 7.3% 1 yr.-5 yr low at $64.
- Tariff situation with numbers so dire that investors must feel that a policy settlement must be near. Look for tariff deals from POTUS.
- Life science stocks traded up broadly with momentum today despite a backdrop of funding cutbacks from NIH, Universities and FDA.
I don’t want to explain why this great rally happened today. I’ve read so many negative articles about the market over the week-end so that I was beginning to believe that the bear market still had many legs down. But over the past two weeks there were two days (and today 4/22) to make great trades so it doesn’t feel like 2002 yet? Choppy and volatile but not a cascade of red tape. The real hit to my sensibility came on Friday when the most defensive play in Healthcare United Health lost 22% on an earnings miss related , which should not be a surprise because it has been highlighted by analysts in the past. So what can we say now about so called “defensive stocks”-that few stocks are really defensive in this market lurching from week to week on chaos disconnected from policy news. It’s not only what we know but the whiplash effect of TRUMP Executive actions which buffet the markets weekly adding to the uncertainty.
The U.S. has been a global leader in in life science and technology. If we continue on the policy its and reckless non-targeted budget cuts, research activities will slow and migrate abroad to edging to major technology centers in Europe, China, Singapore and India.
Consider the fundamental economic and policy issues affecting healthcare and biotech stocks:
- Tariffs are reported as a significant headwind to growth and earnings by major companies : Abbott, JNJ and ISRG.
- Government Support for basic and clinical life science support has reached a low.
- The trade war with China and other countries has caused a disruption in scientific collaborations which will impede progress in combatting global health issues.
- Cutbacks in NIH and FDA budgets will slow regulatory approvals for new drugs and devices.
As we move through the earnings cycle over the next few weeks we will undoubtedly are more updates from CEOs on the impact of government cutbacks and tariffs. Next up are tariffs on pharmaceuticals in many ways are more complex than automobiles. The supply chain in pharmaceutical ingredients runs through many major countries like INDIA and CHINA and have a complex distribution scheme involving not only pricing but regulatory and intellectual property. Yes some companies-Lilly, Roche and Regeneron- will move some manufacturing to the U.S.but the timing and added cost in the short run are hard to know. The consumer is already faced with high drug costs so when you add that to the uncertainty of supply and quality of product there is a lot that go wrong.
MARKET SECTOR IMPACT
As financial results gets announced we will try to track the impact of tariffs however its is likely the impact will hit later in 2025.
MEDtech or medical devices should be one the easiest to understand because the industry is more US-centric. IHI is $57.69 as of 4/23, down 1.32%YTD. However there could be backlash from marketing in various countries. So we need to track International sales. Intuitive Surgical (ISRG) grew revenue 19% from previous ’04 Q1 with to $2.25B, but tariff impact could weigh on earnings because of China and currency fluctuations. Boston Scientific (BSX) beat estimates and grew sales 20.9% to $4.663B for Q1 with GAAP EPS of $045 compared to 0.33 a year ago. Stock surged 4% on optomistic presentation despite an estimated $200M tariff .
Research tools, diagnostics and reagents. Because of NIH and University cutbacks this should have major impact. For example already in BOSTON a HUB for biotech R&D is BEING slowed because of the TRUMP AdminIstration fight with HARVARD.Q1 Results from Danaher (DHR) were positive despite a revenue decline of 1% and maintained guidance with a plan on tariffs being considered. DHR stock is down 17% over one years but today it was up after hours despite slow growth and said it had a plant to manage tariff costs.
Results came out on 4/23 from another major company in life science research and diagnostics ThermoFisher (TMO) with GAAP EPS of $3.98 vs $3.48 in the same Qtr as last year. Revenue was $10.36B vs $10.34B a gain of 1%. Commentary after earning emphasized the challenges of giving guidance due to MACRO uncertainty of navigating tariffs while trying to invest in innovation. Revue risk to top line could be $400M
Large Cap Biopharmaceuticals-Our top picks are : ABBV, GILD,LLY and VRTX. Tariffs of 15-25% are expected but have not been announced.
Clinical Development Stage Companies –SMID Biotechs. The SMID biotechs are quite volatile but lately have good momentum as trades. We still hold the following SMID caps in the green: ADPT,CPRX,CRMD,GH, PTGX, RNA, SUPN and VCYT; as well as others. Seasonality is positive with scientific meetings through June.