With Healthcare Stocks Lagging Look for SMID Life Science and MedTech Trades—Update-2. PPI eases fears

Update-2 4/11.11.am EDT.,.PPI eases fears up only 2.1%. Small cap Life Science trades strong:CRMD up 14%,GERN up over 7%,.XBI holding 90. We need to look at more trades in this subsector as there are buyers ready to pounce on new ideas.

Update-1 April. 10…The markets took a hit today with major indices down about 1% .It could have been much worse but some buyers came in toward the end of the day. The  Russell 2000 (IWM) was down 2.52% as the narrative turned toward the FED and fewer rate cuts. Biotech stocks are more senstive to interest rates so the XBI was down 1.84% to $89.95 and the IBB down 1.8%.  More data is coming with the PPI  tomorrow and bank earnings beginning Friday.

Our small cap biotech spec list was red across the screen today but we had some winners:  CorMedix (CRMD) was up 11.16% to $5.28 as they roll-out their Defen-Cath (R) anti- infective product for the dialysis market; Also Geron (GERN) was up.

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• Healthcare was supposed to be a defensive sector but the XLV was down 3.05% over the past week led by UNH down 7.88%.
• The bellwether XBI was down 4.96% for the week and 9.33% for the month and now  up only 1% YTD. Very bearish.See previous post.
• We could get help for the MedTech sector this week from Conferences and investor updates. The IHI is up 6.17% YTD with some upward trending.

Can SMID caps regain momentum? It was not a good week for healthcare providers and biotech. The QQQs were down 0.8% and the S&P was down 0.95%. The speculative ARKG was down 7.13% for the week!, The winning sectors were: Energy (XLE) up 3.91% and Communication Services (XLC) up 1.07%.

We developed this trading list about one year ago with the idea of finding smaller cap biotechs that have long term potential. Many of these stocks have been good short term trades when market conditions show momentum. We hope to make the model more rigorous in the future but for now it’s based on a few parameters like analyst coverage,cash position and pipeline. Consider them all speculative and as a group a small percent of your overall portfolio. Here are some updates:

1. We took out a few stocks because they are either too large or have revenues that make them more predictable. The stocks are Hologic (HOLX), illumina (ILMN) and Quidel (QDEL). The last one was a huge loser in ’23-’24. We still hold HOLX but sold ILMN after small gains.
2. We added a few new small cap stocks based upon their product / market focus and recent performance, Crenetics (CRNX), and Natera (NTRA). We added several earlier this year : CRBU,CRMD, DNLI, EXEL, RXRX, ROIV.
3. We have strong holds (longs) on the following stocks: ABOS, CRMD, CYRX, EXEL, SUPN and VCEL.

This upcoming week has investor conferences like Needham with CorMedix( CRMD) updates and big MedTech Meeting with the American College of Cardiology (ACC) in Atlanta. So we’ll look for MedTech trades as well.

And be sure to checkout This Weeks’ Barrons, “Big Pharma Stocks Need A Rethink”, featuring Pfizer.

Small Cap Life Science Trades