Update-2 11/4/23…Small caps starting to show momentum after a big week with QQQ up over 6%, IWM up 7.56%, IJR up 7.45%. Seasonality of Q4 gains off to a good start. Broad market rally was sparked by lower bond yields. Even MRNA launches off bottom after disappointing earnings, big write-off.

  • BIOtech lifts off bottom IBB up 6.57%, XBI up 11.45%, XLV up 3.47%. CRSP up 31.62%.
  • Large cap picks meet earnings expectations: LLY, MRK, REGN,VRTX. PFE spec pick up nicely.
  • New picks running: BDX, GEHC New trade ARKG up 17%.
  • Stocks to watch: CERE, EVH, HOLX, IMTX, PACB, QDEL all longs.

Update-1 11/2/23…Tis the season to be trading as rally continues to 3rd Day. Mid caps look better in biotech as reflected by the IBB, six points off bottom to $116.73. Renewed market momentum appears open for new trades. Added to CRSP earlier week up 7 pts from week’s low of $40, on potential of sickle cell anemia and completion of FDA review.

LLY and RGN up over 3%. UNH up 0.92% in broad rally with QQQ up 1.78%.

Healthcare Playbook: Hardly Defensive and with A COVID Hangover

  • Biotech Bear Market: Some nibbling at the bottom with IBB at $113 and XBI at $66.
  • Little help from recent earnings but our Focus Large Cap Biopharma picks are strong holds: ABBV, LLY, MRK, REGN, VRTX. PFE a speculative play.
  • UNH remains Core Holding; but XLV is down 3.29% in October, 8.34% YTD.

Bubble,bubble toil and trouble.

Market Bubbles may take a long time to clear and we created a big one in July 2021 dealing with the COVID pandemic.  Vaccines, antivirals and diagnostic products revenues soared in 2022 driving stock prices to hysterical levels.  Comirnaty mRNA vaccine revenues by Pfizer were down 70% to $11.5B, compared to 2022. Pfizer (PFE) stock is trying to recover at $30 but revenues reported today  show a 41% decline and a 42 cents share loss, the first since 2019. The Company did reaffirm 2023 guidance of 6-8% growth vs 2022 with Revenues of $58-61B and EPS of $1.45 -$1.65 and expect to complete the acquisition of Seagen, a leader in ADC antibody-drug conjugates for oncology treatment, to bolster growth in 2023. But COVID vaccine rates are still lagging in 2023.

Abbvie, Lilly and Merck reported last week and stocks are holding up through today. We will summarize the Large Cap Biopharma financial metrics after Amgen, Lilly, Regeneron and Vertex report this week. MRK is an outperform with diverse pipeline.

Eli Lilly (LLY) has been a huge winner up 51 % YTD in 2023 with the launch of Mounjaro for diabetes and eventually for weight loss. Earnings are coming this week on Nov 2.

  • One of our recent picks GE Healthcare reported today and the stock was up 5.36% today to the $66 handle. Revenue growth was. up 5% YoY with EPS of  $0.83 vs $1.09. Cash flow of $650M vs $622m previous year.

We have seen some disappointing earnings from MEDTECH companies  bringing the IHI down 13.91% YTD. The Diagnostics and Tools sector also  has hit a low in 2023 also because of the COVID Hangover. So watch for better earnings in 2024 from the leaders Danaher (DHR) and ThermoFisher (TMO) both near lows for the year.

And how bad is the Biotech Bearmarket??—Fortunately I diid not own any of these stocks: Nice work from Fierce Biotech-The 2023 Biotech Graveyard. 

I can give you the ultimate 2021 Bubble stock so have a look at Invitae (NVTA) with a 2921 high of $61.59 now at 58 cents. A precursor to the “druggable genes ” theme was Human Genome Sciences..

Three Bubble stocks: Lots of Toil and Trouble-but due for a comeback.

The life science market is very dynamic and you can count on innovation. Look at diabetes long thought to be an intractable medical issue.  Suddenly over the past few years you’ve had breakthrough drugs and diagnostics for DIABETES care. WE hope to have new SMID picks soon.

The market malaise can largely be attributed to the “higher rates for longer”mantra which results in a 5% return from treasury instruments. The market sed to like big pharma because of predictable growth plus a 3+ % yield. Now factoring in pipeline risk, patent expiration and drug pricing policy issues with Medicare the overall investment thesis seems less attractive. Many strategists and technicians are now saying that in Q4 markets will be strong especially after 3 straight months of weakness.




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