Healthcare Portfolio Is Doing Well But Biotech Stocks Are Mired In Macro

If you have been reading our reports over the past two years your stock portfolio should have beaten the market. Our top picks are United Health (UNH) up 4.29% YTD and 135.7% over 5 years, Merck (MRK) is up 42.46% YTD  with good momentum lately, and our top large cap biopharma picks having all done well but lately have been hit with PE compression. But PEs remain at lower end in the mid-teens with dividends. Still near 52-week highs are GILD, LLY, MRK, and REGN and we still like ABBV and VRTX despite the recent volatility. BMY is the weakest among our holdings and is a bit overvalued with a PE of 24 and weak momentum lately. Here are some financial metrics as we approach Q4 and 2022 final large cap biopharma earnings in January.

One concern we have is that many strategists favor the healthcare sector in 2023. The reason given is the defensive nature of the sector with more predictable biopharma earnings and robust product pipelines. And with strong balance sheets large caps have the ability to do M&A to strengthen product portfolios.

The biotech sector has not done well in 2022 despite some strong runs. Small and mid-cap stocks are more “risk-off’ with interest rates rising and sentiment waning. The Russell 200 (IWM) is off 22% YTD but the biotech smaller cap XBI is down 27% with momentum waning. The technicals on the XBI in 2022 do not look good with three tries at the $95 level falling below $80 again today.

(Click on image to enlarge)

(Click on image to enlarge)

Today Madrigal Pharmaceuticals (MDGL) soared 249% on positive Phase 3 clinical data for NASH and liver disease. Normally this kind of positive result would spark interest in the sector. But both the IBB and XBI were down.

So the play in 2023 will be stock picking not so easy with the sector looking weak. Also, we will look at MedTech and Tools for new picks after earnings.

Another loser day, Don’ Fight the Fed!

Long ABBV,BMY,RHHBY, PRHSX,REGN, UNH,XBI

Model                        
PORTFOLIO                        
    2020   2020 2020 2021   2022   2022    
Stock/ETF Ticker Price Wgt Price   Price 1 year YTD 30d Price 5 days  
    10/25 % 12/31 % Perf 12/31/21 % Perf %Perf %Perf 12/16 % Perf  
                         
iShares NAZ Bio IBB* 136 15 151.5 25.7 152.62 -11.56 -12.86 -0.9 133  
                         
iShares Russell 2k IWM 163 5 196.4 18.3 222.45 \17.86 -21.61 -5.36 174.37 -2.38  
Merck* MRK 80 10 81.77 -10 76.64 43.85 42.48 9.28 109.2 0.39  
United Health UNH 330 25 350.7 27.19 502 20.68 4.29 2.38 523.7 -2.87  
SPDR S&P Bio XBI 117 10 140.8 48 111.96 -36.34 -27.69 -0.65 80.96 1.86  
Healthcare SPDR XLV 108 25 113.4 14.71 140.89 -3.51 -3.89 1.89 135.53 -1.78  
T.Rowe Hlth Sci PRHSX n/a 5 99.65 n/a 104 -23.47 -13.61 -0.72 89.83 -5  
iShares U.S MedT IHI 50 5 54.83   65.85 -25.91 -21.49 -0.43 51.7 -2.27  
                         
                         
Tracking Comp COMP                      
              *          
ARK Genomic ARKG     93.26   61.24 -60.55 -50.75 -10.37 30.16 -0.63  
FIDO Biotech FBIOX     25.18   19.35 -33.57 -16.92 2.26 16.27  
FiIDO MEDtech FSMEX     76.15   83.18 -33.96 -26.8 0.59 60.89 -2.6  
DOW DIA     310   363.32 \(12.6) -9.45 -2.11 328.97 -1.91  
S&P 500 SPY     379   475 -17.48 -19.3 -3.08 383.27 -2.55  
NASDAQ-100 QQQ     315   397.85 -27 -31.07 -3.92 274.25 -2.76  
                         
Top Biopharmas                        
              n/a          
Abbvie ABBV           35.22 18.52 5.67 160.48 -1.58  
Bristol Myers Sq BMY           24.91 17.87 -3.49 73.49 -6.77  
Eli Lilly LLY           41.3 30.28 1.97 359.87 -0.31  
Merck MRK           17.86 42.48 9.28 109.2 0.39  
Regeneron REGN           25.39 14.47 -1.7 723.17 -3.59  
Vertex VRTX           60.35 38.8 -0.21 304.8 -2.38

More By This Author:

Uncertainty Grips Markets, On A Clear Day Maybe You Can See A Week Ahead
Can Biotech Stocks Continue Rallying In This Bear Market?
Steady As She Goes With Healthcare Stocks

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