Healthcare Stocks Are Lagging With Big Earnings Weeks Ahead

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  • Large caps are still favored considering MACRO concerns: LLY, MRK etc w,atch UNH earnings.
  • SMID Life Science trades can be a good trading opportunity should momentum return.
  • With increased volatility healthcare stocks are due for a comeback with XLV at $138.63.

Geopolitical concerns continue to roil markets, so now that I’ve stated what you already know what else is going on. MACRO concerns are back with massive US debt and recent weak treasury auctions all in contrast to a strong economy with persistent inflation. Now rates are up with 10yr Tsy yield spiking at 4.63% and Fed cuts pushed out. We are about 3.5% off 2024 highs.

Healthcare stocks disappointed again last week with the XLV down over 3% and up only 1.65 % YTD, in a continued downtrend since March 28. Moreover the leadership, large-cap biopharmas and United Health (UNH) down 10.25% over the past month and down 15.73% over one year are also waning. With the IRA (Inflation Reductio Act) coming into play in September we will see another negative item for drug stocks. And biotech stocks are not doing much better with the IBB down 5.94% for the month and 5.9% YTD ; and the XBI breaking  support off 2% today and 3.3% YTD at $86.34 from recent support levels of $90. The only big winners in 2024 YTD have been the diabetes and weight loss drugs LLY up 28.94% YTD, NVO up 20.36% and their smaller cap speculative plays. So why rebalance with new positions until we get earnings and guidance from the large caps coming up over the next 2 weeks.

Tech, Real Estate, Consumer Discretionary were weakest groups today.

We still see trading opportunities coming up from our Life Science trading list and had good gains from CorMedix (CRMD) up 41.21% over the past month and 23.99% with some profit taking at highs of $6.68. It is a volatile stock still in a short squeeze.  Keep in mind that this list of SMID speculative Life Science stocks is for experienced traders and they represent a collection of stocks that have an analyst following , good cash positions with strong momentum in the past. With biotech in the doldrums ETF investing won’t work with short term traders. So with speculative appetite still up we like short term trades that can also result in big long term gains. Let’s call it the innovation trade where AI meets genomics or some new theme.

This week we have important large-cap earnings from Abbott (ABT), JNJ and United Health (UNH) which should provide clues to important subsectors of healthcare. If earnings meet expectations over the coming weeks then we can return to healthcare as a portfolio anchor during volatile times.

Many large cap biopharmas took a hit recently: ABBV, PFE, REGN ,VRTXA lot of volatility within the group.

Here is how our large cap biopharmas are doing now considerably off their highs as investors took profits or avoided due to MEDICARE price (IRA) and pipeline concerns.

Top Biopharmas *           2022 11/11 4/15/24 %YTD 5 yr % total 1 mo.  
Abbvie ABBV *         161.64 138.59 161.67 4.32 99.52 -9.11  
Amgen AMGN               265.51 -7.82 38.87 -1.25  
Astra Zeneca AZN *         68 63.17 68.73 2.0572.65 57.62 3.65  
Bristol Myers Sq BMY           71.05 50.61 48.51 -5.46 4.32 -7.32  
Gilead Sci GILD           85.39 75.92 67.75 -16.37 3.55 -8.06  
Eli Lilly LLY *         447.71 597.71 750.77 28.79 505 -0.45  
Merck MRK *         110.95 101.39 126.19 15.75 68.4 3.84  
Pfizer PFE *         51.24 29.48 25.91 -10 -35 -7.27  
Regeneron REGN *         725 798.94 898.56 2.31 139.3 -6.83  
Vertex VRTX *         288.78 373.65 397.36 -2.34 117.74 -2.53

More By This Author:

Healthcare And Biotech Stocks Review: Q1 2024 Performance
Biotechnology And Healthcare, A Bit Of A Lull
Healthcare And Biotech Update With Market At 2024 Highs

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Dan Jackson 1 month ago Member's comment

Hope to see some positive movement.