Update-2 5/27/23… Not a great week for healthcare stocks or anything other than IT and the QQQ up 3.59%. S&P 500 Healthcare down 2.93%, Materials down 3.14%, Staples down 3.21%. No debt ceiling deal, recession watch is on.
So Karen Firestone, former manager of the Fidelity Biotechnology Fund (FBIOX), was asked on CNBC about Large Cap Biopharma stocks this week. And she said no she does not own any because they lack innovation. But isn Merck (MRK) a lead in oncology drugs and Lilly (LLY) with new blockbuster drugs for obesity and diabetes?
Update-1 5/26 2p EDT …It’s all about Tech, Chips and Software driven by AI. Biotech stocks still lagging with XBI down 2% for the week, IBB down 2.54%, XLV down 2.95%.
FSELX Fido Semiconductor Fund was up 10% yesterday because of a 25% holding in NVDA!
SMID winners this week: CRSP,PACB, GERN, VCYT.
Looking for ASCO plays next week.
Lightened up on MedTech: ABT,IHI.
A Good Week for the Market with Some Crosscurrents
- Bulls Ignore MACRO and Debt Ceiling Concerns for now but JUNE 1 deadline looms.
- FTC Challenges Amgen Deal and M&A models.
- Rotation Continues Out of Defensive Healthcare Stocks into InfoTech.
Investors ignored the grim pitfalls of the MACRO last week choosing to buy tech stocks in the NASDAQ-100 including new Information and Communication Sector themes such as AI and even rotating into beaten down Financials. Healthcare stocks lagged as defensive plays while small caps caught bids. Biotech stocks were rattled by an aggressive FTC posture as Lina Khan challenges the buyout of Horizon Therapeutics by Amgen (AMGN). The Company faced a double whammy also losing a bid to revive its cholesterol lowering drug patents to French rival Sanofi SA. AMGN was down 4.09% for the week and the IBB was flat at the $130 level. The equal weighted XBI lost about 1% for the week but recovered on Friday to a $85.37 close. So let’s see whether the XBI can hold onto its tepid momentum as many of its component stocks would be deemed dealmaker targets.
SMID stocks would be the sector to watch as we need to get through the major MACRO test in coming weeks. The IWM was up 1.96% for the week and the IJR was up 2.32%. Here is how some notable stocks in our Life Science Portfolio fared last week:
Acumen Therapeutics (ABOS) a new pick held close to its new trading range of about 6.
CRSPR Therapeutics(CRSP) got hit with profit taking down 2.77% for te week but is still up 16% over one month.
PACB is in a strong up-trend up 3.94% for the week and 13.94% over one month. Q1 earnings were up 17% over the same period for prior year.
Veracyte (VCYT) remains a laggard but was up 3.7% last week and is a niche play in molecular diagnostics for cancers.
No portfolio changes were made in our SMID Portfolio.
Large Cap Biopharmaceuticals came back strong on Friday and most of our top picks are near their 52 week highs: LLY MRK VRTX. Regeneron (REGN) held up 1.97% last week despite concerns about Eylea sales longer term due to competitive pressures. ABBV remains a laggard with Humira sales weighing on the stock until we get pipeline developments.
- ASCO is coming up on June 2 so add GILD to your biopharma portfolio under $80. Gilead Sciences has beefed up its oncology pipeline with Kite Pharma.
Healthcare stocks have been lagging in 2023 with the XLV down 1.97% MTD and 3.34% YTD with CVS and UNH contributing to the weakness.
The optimism of last week could change quickly if a bilateral debt ceiling agreement cannot be achieved. But concerns about the FED rate increases seems to have ebbed.