12/3…We will focus on SMID cap stocks in the coming week as tracked by the XBI with resistance at $80.
Also track health care providers (IHF) in light of Cigna/ Human merger potential and UNH as the dominant player.
Update-2 …XBI is cruising to $77 handle up 3% on Friday, IBB up 2.71% for the week,M&A picking up so the small caps are working.. Other Spec stocks on our watch list: ARKG, CRSP, CYRX, EVH, PACB, TWST, VCYT, etc. Momentum trading model is intact. See sectors below:
- Large cap winners for week: ABBV, AMGN, AZN, BMY, GILD.PFE down on obesity pipeline drug failure.
- Healthcare flat/steady with UNH flat and XLV up 0.53%; EVH up 4%;Cigna and Humana in merger talks.
- IHI holding up 1 at $50 handle, MDT up 1%, but no traction ;FSMEX up 1% for month.
- PRHSX up 5.76% for month nice recovery.
- Small caps: IWM up 3.1% for week, IJR up 4% to $99!
Update cont.,,,New picks had a good day: ABBV up 2.81% PFE up 1.3%, in strong drug group. But November ever for S&P. PCE inflation downto 3.5%, PPE up.
Update-1…11/30. 11a Dealmaking perks up biotech with XBI up 4% to $76 handle.
- Abbvie buys Immunogen (IMGN) for $10.1 B for targeted cancer therapy with an ADC. Pfizer recently paid $43 M for Seagen another Company with Antibody Drug Conjugate -ADC-leader. IMGN up over 80% aftelangushing at $4 earlier 2023. ABBV up 2%.
- Green screen day in small cap biotech.IBB up 1.8%.
- Xenon raises $300M in follow on with neurology portfolio with MDD data from Phase 2.
- Large cap biopharma in the green
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- Healthcare stocks are a good defensive play for your portfolio and are due for recovery after being down about 5% in 2023.
- Key to continuing rally will be Momentum from SMID caps
- MACRO fears should ebb with innovation in the forefront. 10 year yield down to 4.4%.
We are having a great but choppy market recovery over the past four weeks and it looks like it should continue through to the next earnings cycle in January. The biotech sector descended to a bear market this quarter as tracked by the IBB so mark October 27 as the low point for 2023. Concurrently you had similar market pattern for healthcare stocks as measured by the XLV. The sell-off in biotech began at peak values in September 2021 with uneven performance in 2023. Despite these sector trends you had several opportunistic trades in large cap biopharma and diabetes stocks. But we’ll need some catalysts from M&A or new products to spur biotech stocks.Update 11/28… see Avidity /Bristol Myers deal.
Bear market in biotech. Get over it!
Here is a summary for the review of your healthcare portfolio:
1.Large Cap Biopharmaceuticals
There really is no ETF that captures these stocks so you just have to pick a few. We recommended ABBVIE, LLY, MRK, REGN, VRTX and see PFE as a turnaround play with a 5% + dividend! Although it is a little late you still have to have a GLP-1 obesity play with the two majors are Lilly (LLY) and Novo Nordisk (NVO). Gene therapy recently got approved with CRISPR technology for sickle cell anemia and CAR-T approvals for cancer therapeutics are coming soon.
If you wanted broad exposure to the Healthcare sector there are number of ETFs but the most popular is XLV up 2.73% over 4 weeks yet down 3.47% YTD at $131.13. But a core healthcare stock is United Health (UNH) up 4.21% over 4 weeks and 3.19% YTD.
3.MedTech and Medical Devices
A diversified healthcare portfolio should have several medical device stocks and one ETF the U.S. Medical Device (IHI) has begun recover up 10% over the past 4 weeks to $50.22 yet still down over 4% YTD. Our recent trades are ABT and SYK. Another good Fidelity fund covers the bases of MedTech ad Diagnostics is FSMEX.
Every few years an innovative technology revives the healthcare industry like DNA sequencing, proteomics, molecular diagnostics and maybe AI. A small position in the T.Rowe Price Health Sciences Fund (PRHSX) can complement your portfolio. The top blue chips are included: LLY,TMO, MRK, ISRG,and VRTX. The Fund is down over 3% YTD but has an average 5 year returns of over 8%.
Recently we picked GE HealthCare (GEHC) as an innovation play and it is up 26% YTD. But weak this am on margin concerns,
5.Small Cap Speculative Biopharmaceuticals
Last week we provided a review of small cap speculative trades. When momentum is running some of these beaten up stocks can run fast and hard. The XBI is a good momentum indicator and it is up 9.79% over one month near the bear market bottom.
Recent movers are CRBU,CRSP, NVTA.
This week we’ll see data from retail Black Friday and cyber Monday sales, a few FEDspeakers, and inflation data (PCE) on Thursday. No apparent trading impact from Barrons article on vaccines.
But the real test of the biotech market will be small and mid-cap stocks. Here’s our last data summary on various healthcare subsectors at its nadir in early November.