3 Biotech Stocks That Are Broker Favorites

Biotech stocks, which have been showing signs of recovery this year, slipped last week following the release of the Budget Blueprint for 2018, Amgen’s (AMGN - Free Report) data on its PCSK9 inhibitor, Repatha, and a couple of analyst downgrades for Biogen (BIIB - Free Report) .

Budget Calls for Higher Fees

Even though President Donald Trump has often said that he is in favor of a faster drug approval process and the speeding up of new innovation, his budget calls for higher fees for regulatory reviews. According to the Budget Blueprint, FDA medical product user fees are expected to cross $2 billion next year, double the 2017 annualized continuing resolution (CR) level of about $1 billion.

The budget also proposes a reduction of $5.8 billion in the National Institutes of Health’s (NIH) spending.

Amgen Slips on Data

Meanwhile, Amgen, one of the biggest names in the biotech sector, presented highly awaited data on its PCSK9 inhibitor, Repatha. Even though the data was positive, Amgen’s shares were down as some of the data was not as good as had been expected.

Biogen Hit by Analyst Downgrades

Biogen, known for its presence in the multiple sclerosis (MS) market, suffered a blow with a couple of analysts downgrading their rating on the stock. The company’s shares were down 5.5% last week. A key concern is regarding the performance of the company’s new product launch, spinal muscular atrophy treatment, Spinraza. Increasing competition in the MS space as well as a lack of near term catalysts will weigh on the stock. Year-to-date, Biogen has underperformed the Zacks-categorized Medical-Biomedical/Genetics industry with shares declining 3.1% compared to the industry gain of 8.1%.

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Although the Nasdaq Biotechnology Index declined 1.9% last week, there are several factors that should drive the biotech sector. First and foremost, this is an industry that will continue to witness demand for its products given an aging population and the increasing prevalence of a wide variety of diseases. Strong pipelines, innovative treatments, impressive results, and increased health care spending should support growth. Trump's pro-business stand is also expected to benefit the sector. A faster drug approval process and the proposed removal of outdated regulations that drive up costs and slow down innovation should also work in favor of this sector.

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