April Is Busting Out For Healthcare And Biotech
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- Another sector rotation favoring healthcare, energy and precious metals. Consumer discretionary, Industrials and small caps lag.
- Small caps and speculative biotechs lag. No momentum.
- MACRO headwinds ease but no Fed rate cuts expected near term.
Last week was a good week for healthcare stocks and most large cap biopharmaceutical stocks resumed an upward trend. Here is where we were at our last Healthcare Portfolio update at the end of March. What has changed is that investors are investors are more concerned about a slowing economy or even stagflation and seek growth with a defensive posture. The big movers after the banks collapsed were large cap techs with the QQQ up 19.44% YTD and 6% over one month.
Here are some key positions in our model portfolio that have worked over two weeks but notice how prices have risen about 10% since 3//28.
The Healthcare SPDR ETF (XLV) has finally outperformed up 4.24% for the week although still down 1.72% YTD. UNH is a large core holding up 9.09% for the week to $512.81. This ETF also has major holdings in MedTech and Dx players: ABT, DHR, JNJ and TMO. It should be noted that an ETF that covers U.S. Healthcare Providers (IHF) was up 5.38% this week led by CVS, ELV, HCA and HUM.
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The iShares Biotechnology ETF (IBB) also showed nice gains of 3% for the week because of moves in large cap biopharma stocks such as GILD, REGN, and VYX plus nice innovation and timely plays: BIIB, ILMN, MRNA, SGEN. This ETF contains some of the top well-capitalized biotechs and many pay dividends. Our top picks may change but we have recommended ABBV, GILD, LLY, MRK, REGN and VRTX. See our recent review of Large Cap Biopharmaceutical stocks.
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Small caps continue to lag despite SPDR S&P Biotech (XBI) up 2.95% for the week and 7.39% YTD. No momentum. Other small cap indices lag: IWM, IJR but Russell Growth (IWF) looking better technically. Our SMID picks looking better: EVH, QDEL, HOLX.
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The iShares U.S.Medical Device ETF (IHI) is stabilizing up 2.13% for the week and 3.23% YTD. ABT and TMO are top holdings.
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So the issue going forward is small cap growth tied to Fed and “soft landing” ,otherwise healthcare looks good.
Prices as of 3/25.
| Model | ||||||||||||
| PORTFOLIO | ||||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | 2023 | 2023 | ||||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | P | 1Y | Price | YTD | |||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | 12/31/22 | %Perf | 3/25 | % Perf |
Trend |
|||
| iShares NAZ Bio | IBB* | 136 | 15 | 151.5 | 25.7 | 152.62 | 130.55 | -3.22 | 125.87 | -4.13 | – | |
| iShares Russell 2k | IWM | 163 | 10 | 196.4 | 18.3 | 222.45 | 174.36 | -16.54 | 171.79 | -1.47 | d | |
| Merck* | MRK | 80 | 10 | 81.77 | -10 | 76.64 | 110.81 | 30.33 | 104.8 | -5.54 | – | |
| United Health | UNH | 330 | 15 | 350.7 | 27.19 | 502 | 530.27 | -7.3 | 475.99 | -10.22 | d | |
| SPDR S&P Bio | XBI | 117 | 10 | 140.8 | 48 | 111.96 | 83 | -19.16 | 74.19 | -10.61 | d | |
| Healthcare SPDR | XLV | 108 | 20 | 113.4 | 14.71 | 140.89 | 135.88 | -6.15 | 127.3 | -6.29 | – | |
| T.Rowe Hlth Sci | PRHSX | n/a | 5 | 99.65 | n/a | 104 | 89 | -8.22 | 86.35 | -3.86 | – | |
| iShares U.S MedT | IHI | 50 | 10 | 54.83 | 65.85 | 52.57 | -11.22 | 52.52 | -0.1 | u | ||
| MedTech* | ABT | new | 5 | 123.5 | 127.46 | 109.83 | -16.78 | 98.05 | -10.69 | d | ||
| Tracking Comp | ||||||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | 28.23 | -37.58 | 28.65 | 1.49 | – | ||||
| Direx3X Bull | LABU | 7.66 | -72.78 | 4.57 | -35.36 | d | ||||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | 16.04 | -5.55 | 15.32 | -5.9 | d | ||||
| FiIDO MEDtech | FSMEX | 76.15 | 83.18 | 61.58 | -11.33 | 62.8 | 2.06 | – | ||||
| DOW | DIA | 310 | 363.32 | 331.34 | -7.13 | 322.32 | -2.72 | d | ||||
| S&P 500 | SPY | 379 | 475 | 382.41 | -12.15 | 395.75 | 3.48 | – | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | 266.33 | -13.56 | 310.89 | 16.75 | u | ||||
| Top Biopharmas | ||||||||||||
| Abbvie | ABBV | 161.64 | -1.41 | 158.02 | -2.22 | – | ||||||
| Bristol Myers Sq | BMY | 71.58 | -6.53 | 67.68 | -5.93 | – | ||||||
| Gilead Sci | GILD | V | 85.39 | 35.27 | 80 | -6.81 | – | |||||
| Eli Lilly | LLY | 362.94 | 16.84 | 336.13 | -8.12 | – | ||||||
| Merck | MRK | 110.94 | 30.33 | 104.8 | -5.54 | – | ||||||
| Pfizer | PFE | V | 51.24 | -23.2 | 40.39 | -21.17 | d | |||||
| Regeneron | REGN | 721.7 | 20.63 | 820 | 13.65 | u | ||||||
| Vertex | VRTX | 288.78 | 24.91 | 314.39 | 8..87 | u | ||||||
More By This Author:
Large Cap Biopharmaceuticals Q1 2023: In This Bullish Run Biotech Lags
Biotech And Life Science Trades: Q1 2023 Performance By The Numbers
Can Healthcare Stocks Survive Macro Headwinds?
Disclosure: Long ABBV ABT ,IBB, FSMEX, IHI, MRK, PRHSX, REGN ,UNH,VRTX.
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