Large-Cap Biopharmaceuticals: Bearish Sentiment Curbs Buyers

Laboratory Test Tubes

Image Source: Unsplash


Large Cap Biopharmaceutical Stocks Hit by Bearish Sentiment

  • Large cap biopharma are off their highs despite reasonable valuations plus dividends.
  • Capping of prescription drug prices for seniors remains a big political concern.
  • Macro and sentiment dominate trading with S&P Range bound 3600-4200.

Biopharma stocks took a hit last week as investors shifted to other sectors amidst the usual Fed rate rise concerns and now some hard criticism of the drug industry by Biden in his State of the Union speech. Also, a bearish article in the Wall Street on Saturday offered bleak prospects on funding for early-stage companies because of higher interest rates, geopolitical tensions with China, and dire prospects for an exit through IPOs. But the companies mentioned are relatively unknown and maybe do not have broad and deep product pipelines. We know that 2021 was boom times for biotech funding so maybe too many companies were created. Nonetheless, we need to look at funding of smaller companies so that they can advance their pipelines. Also since valuations of many SMID companies have come down this could create more M&A, and certainly more licensing deals. Large and mid-cap biopharma companies have strong balance sheets and need to bolster their pipelines.

(Click on image to enlarge)

Need hard data on funding for small and mid cap biotechs.

Last week was a down week overall with inflation and this week’s CPI on traders’ minds. The energy sector was a winner up about 5% with strength as well in commodities. Healthcare stocks were flat but the real issue was weakness in the small caps with the IJR down.3.46% and the Russell 2000 (IWM) down 3.36 %. Techs stocks are more at the forefront with AI.

Many large-cap biopharmaceutical stocks are now down significantly YTD: AMGN 7.67%, ABBV 5.92%, LLY 5.67% but remain strong holds with good dividends above 3%. In early trading today biopharma stocks are holding up. Our favorite large caps for 2023 are ABBV, MRK,  REGN, and VRTX. Good dividend plays are BMYGILD, and PFE.

  1. The IBB now at $134, needs to hold $130 for a  bullish uptrend.
  2. LLY is most overvalued because of bullish prospects for the obesity drug Mounjaro.
  3. See our recent article on the sell-off of smaller cap speculative biotechs with the XBI at $85 level but still up YTD.
  4. Top 52-week winners are: AZN,GILD, LLY, and MRK.
  5. ABBV took a hit on HUMIRA competition from biosimilars.

We remain long-term bullish on biotech stocks but you need to follow technicals until we get through this muddle.

Biogen reports 2/15 Wednesday.

Company Ticker Price Price Price MktCap % Perf            
    1/15/18 2/11/23 11/1/19 2022 1 yr   FWD Analyst % 52 week H YTD %
          $B   P/S PE Recom Div    
Abbvie ABBV 100.000 152 81.75 263 6.54 4.55 13.61 2.4 3.89 165.78 -5.92
Alexion*(ALXN) ALXN 123.000 182.5 109.38 40.33 n/a 4.56 9.38 2.2  

*acquired by AZN

 
Amgen AMGN 185.000 242.5 221 128 5.98 4.87 12.88 2.7 3.51 288 -7.67
AstraZeneca* AZN 35.000 68.88 40.34 209.34 17.54 4.72 16.4 2 2.11 71.7 1.59
Biogen BIIB 336.000 286.3 299.2 41.33 30.11 3.99 18.24 2.2 306.28 3.39
Bristol Myers* BMY 63.000 72.2 57.16 152 8.56 3.29 8.8 2.3 3.16 80.59 0.35
Celgene* (BMY) CELG 106.000 n/a 108.53 77 n/a 4.69 8.7 n/a  

*acquired by BMY

 
                         
Gilead Sci GILD 79.000 86.7 61.69 106.6 40.31 3.91 12.09 2.5 3.46 89.63 0.99
GlaxoSmithK* GSK 38.000 36.84 45 74.3 -19.35 2.09 9.12 2.8 3.87 *46.97 1.99
Eli Lilly LLY 85.000 345.12 113 325 44.02 11.38 29 2 1.08 367 -5.66
Merck MRK 59.000 108.57 78 264.3 41.81 4.56 12.65 2 2.69 113.8 -2.15
Pfizer PFE   43.88   243.3 -13.28 2.42 11.58 2.4 3.74 53 -14.36
Regeneron REGN 367.000 757.61 310.48 81.4 22.55 6.69 16.82 2.3 802 5.01
Vertex VRTX 158.000 297.4 196 74.85 26.08 8.38 18.78 2.2 314h 2.98
                         
      2/11 11/19   %YTD 1 yr       2022 high  
XBI     85.62 93   3.16 -9.26       94.36  
IBB     132.36 119.65   0.81 0.42       138.74  
FBIOX     16.31 20.26   0.18 1.2       17.31  
XLV     132.49 121.11   -2.47 0.31       143.42  
XPH     42.76 39.47   4.42 -3.5       44.31  
UNH     494.25 252   -6.78 1.55       558  
QQQ     299,70 201.23   12.55 -16.39       371.83

More By This Author:

When Small Cap Biotechs Lose Momentum: Are You An Investor Or A Trader?
Sector Shift Stalls Healthcare Stocks But Biotech Shows Gains In January
Healthcare Sector Is Lagging As We Enter 2022 Earnings Season

Disclosure: Long: ABBV, BMY, GILD, MRK, LLY, REGN and VRTX.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.