It’s Been a Tough Month for Healthcare Stocks…Update 3…ABBV

Dec 2, 2024 | 2024 Rayno Biopharmaceuticals Portfolio, Biopharmaceuticals, Healthcare stocks

ASH Coming up this week.

Midday Movers: ABBV up 0.65%, PFE up 1.87%, REGN up1.5%, UNH up 0.64%, VRTX up 2.6%.

Update-3 12/9..1:35...ABBVIE’s Parkinson’s drug shows promising results.

Update-3 12/9…11:32a  Healthcare sell-off looks overdone.MOVING to a HOLD on REGN, PFE, UNH. Update at close.

Update-2 12/8/24…UNH takes a big hit down almost 10% on delayed reaction and social media fallout on “insurance claim denials”. Looks like broad political implications for health insurance industry which is bulwark to investing in the the healthcare sector. Here is the UNH  business update before the murder.Moreover the TRUMP administration  will have new health policy initiatives so one should be aware of shifts in  the market

With the market favoring growth stocks in technology and communication services over defensive sectors like healthcare before the UNH assassination investors should focus on health sciences like biopharma and medtech. We are long ABT,  BSX. ISRG and FSMEX.

  • XLV down 2.12% for the week.
  • IBB and XBI flat for the week.
  • LLY comes back  3.94% wtd.
  • U.S. Healthcare Providers (IHF) down 4.54% wtd, down 0.86% YTD.

UPDATE-1 DECEMBER 3…Some good trades: LLY picks up momentum 5% in 5 days with ZEPBOUND data beating NOVO NORDISK in study. VRTX poised for gains as well.

  • SMID winners today with the XBI trying to come back up over 1% at 98.79:  BBIO, EXEL, GH, ILMN, KROS, NTRA, PACB, TEM, TWST.
  • UNH holds steady after CEO fatally shot in Midtown Manhattan. XLV flat at $147.
  • MEGAcap tech, chips and software sectors continued strong today;energy was very weak.

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It’s Been a Tough Month for Healthcare Stocks but Momentum Favors Small Cap Biotechs.

  • Large cap Biopharmaceutical stocks sold off because of competition and lower revenue growth.
  • MedTech sector show less volatility and more growth potential for 2025.
  • SMID caps show good trading prospects because of new products, pipeline and M&A.

It’s been a very difficult month for the healthcare sector not only because of disappointing Company news but also disruption  caused by the election and future policy issues with an incoming TRUMP administration. We covered some these issues on previous posts but we can say in general that I cant remember a period where so many issues have arisen with specific large cap companies. We wrote about some of the fallout on November 3 and recommended a tighter portfolio review with some rebalancing.

In the meantime the overall market performance has been broadening out with general indices like the S&P 500 or even the DOW industrial and cyclical stocks. All major indices have hit new highs last week up about 25% YTD, almost twice as good as typical diversified heathcare portfolio for an active fund for example the PRHSX up 10% YTD.  Investors have moved away from MAG 7 up 5.87% MTD and technology stocks as well: XLK up 25% YTD . So given all the usual changes we expect as the 2024 Calendar turns we have a NEW ADMINISTRATION with potential for unprecedented news and potential for greater volatility.

Momentum in the market is expected to continue through year-end.  However the sectors with the strongest momentum are in order: technology, financials and consumer defensive and industrial all stronger than healthcare. Looking at actual sector performance through  the  SPDR ETFs  it looks something like this: Communication services up 27.78%, Financials up 25.8%, Industrials up 18.61%, Technology up 16.1% and Healthcare 8.98%.

We provided an update of our SMID cap trading portfolio recently and here are some notable winners: ADPT, BBIO, CPRX, CRMD, EXEL, NTRA, SUPN, TEM, TWST, VCEL.VCYT.

AS of the 12/2 opening at 10a EST biotech stocks are mixed to down with the XBI at the $98 level a stalled rally. MAG 7  stocks are up: AAPL, META, NVDA, TSLA etc.

Here are some takeaways from November 2024 stock performance after Q3 earnings;

  1. Only three of our large cap biopharma picks “avoided” the recent correction: ABBV up 18% YTD, LLY up 36% YTD, VRTX up 15% YTD. But all stiil took a hit.
  2. Two lagging large caps showed gains for the month : BMY up 12.5% and GILD up 4.3%.
  3. Two big large cap losers for the month: LLY and REGN had competitive and revenue issues  See November  reports
  4. Big gainers for the month in healthcare:  UNH up 7.95% and XBI up 11.57%.
  5. We favor SMID biotechs because of M&A and general trends in the market favoring small cap growth (IWM,IGR).
  6. MedTech and devices show strength after Q3 earnings: FSMEX up 4.5% for November and 15.9% YTD; the IHI is up 3.77% for November and 13.23% YTD.
  7. Top ETFs trending up are the IHI and the XBI, although technically IBB is also in an uptrend.

LONG: XBI and large caps in order of weighting ABBV, LLY, VRTX, GILD, PFE, BMY, MRK, UNH and REGN.

Model
PORTFOLIO *
2020 2020 2020 2021 2022 2023 2024 5 yr %
Stock/fETF   Ticker Price Wgt Price Price Price Price P
10/25 % 12/31 % Perf 12/31/21 12/31/22 11/11 11/30 %Perf % % H
P YTD MTD 2024
iShares NAZ Bio IBB 136 10 151.5 25.7 152.62 130.55 115.53 141.55 4.2 18.56 0.83 148.85
iShares Russell 2k IWM 163 10 196.4 18.3 222.45 174.36 175 241.87 20.51 48.54 8.73 241.87
Merck* MRK 80 10 81.77 -10 76.64 115 101.39 101.64 -6.77 31.58 -2.48 -132.96
United Health UNH 330 15 350.7 27.19 502 530.27 541.21 610.2 15.9 132.17 7.95 625.25
SPDR S&P Bio XBI 117 10 140.8 48 111.96 83 66.95 99.62 11.8 6.64 11.57 104.19
Healthcare SPDR XLV 108 25 113.4 14.71 140.89 135.88 126.27 147.41 8.09 47.65 -0.94 157.24
T.Rowe Hlth Sci PRHSX n/a 5 99.65 n/a 104 89 83.41 96.88 10.22 15.18 -0.61 101.48
iShares U.S MedT IHI 50 10 54.83 65.85 52.57 45.75 61.11 13.23 40.53 3.77 61.11
MedTech* ABT 5 123.5 127.46 109.83 94 118.77 7.9 39.04 4.12 120.92
Diversfied MED JNJ new 155 -1.1 12.53 -4.08 167.16
Tracking Comp
ARK Genomic ARKG 93.26 61.24 28.23 24.1 25.98 -20.82 -25.11 7.98 33.16
Direx3X Bull LABU 7.66 2.74 125.53 2.92 -80.41 – 174.12
FIDO Biotech FBIOX ** 25.18 19.35 16.04 14.39 20.89 17.16 -7.03 -2.66 22.47
FiDO MEDtech FSMEX 76.15 83.18 60.04 51.64 69.18 11.69 15.69 4.52 69.18
JanusHendLifeSc JNGLX 77.42 11.99 23.6 -1.66 82.6
DOW DIA 310 363.32 331.34 343 450 19.4 59.66 6.14 450
S&P 500 SPY 379 475 382.41 440 602.55 26.77 91 3.74 602
NASDAQ-100 QQQ 315 397.85 266.33 378.39 509.7 24.5 147.4 2.89 514
Technology SPDR XLK 128.93 161.97 124.44 179.52 233.7 21.4 164.34 1.52 238
Top Biopharmas * 2022 11/23 11/30/24 %YTD 5 yr % total 1 mo. H
Abbvie ABBV * 161.64 138.59 182.93 18 107 -3.56 203.9
Amgen AMGN 282.87 -1.79 20.6 -10.8 337
Astra Zeneca AZN 68 63.17 67.62 0.4 38.65 -11 87.3
Bristol Myers Sq BMY 71.05 50.61 59.22 15.42 2.81 12.5 59.82
Gilead Sci GILD * 85.39 75.92 92.58 14.28 37.9 4.3 97.9
Eli Lilly LLY * 447.71 597.71 795.5 36.4 627.87 -11.19 950
Merck MRK * 110.95 101.39 101.64 -6.77 21.58 -2.48 132.9
Pfizer PFE * 51.24 29.48 26.21 -8.96 -28.5 -9.18 31.39
Regeneron REGN * 725 798 750.22 -14.58 101.9 -19.2 1200
Vertex VRTX * 288.78 373.65 468 15.05 112.7 -1.73 516.7

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