Biotech And Healthcare Portfolio Playbook For December 2023/24

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Dna, Genetic Material, Helix, Proteins, Biology

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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.

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 ABBV, 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.


2. Healthcare Proxy Play

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.


4. Broad Health Sciences Play

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, and NVTA.


This week we’ll see data from retail Black Friday and cyber Monday sales, a few Fed speakers, 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.


More By This Author:

Are You A Trader Or Investor: Biotech Momentum Is Picking Up
Risk On For Biotech - Time To Trade The Small Caps
Healthcare Playbook: Hardly Defensive With A Covid Hangover In Biotech

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Harry Goldstein 1 year ago Member's comment

Good summary, thanks.