Large Cap Biopharma - Well Positioned For Choppy Markets

Large Cap Biopharma-Well Positioned For Choppy Markets

  • Large-cap biopharma can provide value plus growth in choppy markets.
  • Valuation parameters are more attractive than the S&P 500.
  • Look for milestone clinical updates or M&A.

If the past week is any indicator large-cap biopharma stocks are a good place to hide from the turbulence of 2022 markets. Our recent picks have done well over the past six months: Abbvie (ABBV) up 24.88%, Bristol-Myers Squibb (BMY) flat, and Vertex Pharmaceuticals (VRTX) up 19.79% all beating the IBB down 22,51%. As investors seek value and dividend stocks as a respite from high flier tech stocks large-cap biopharma are strong holds. And some of the biopharma laggards provide nice dividends: Amgen (AMGN) 3.4%, Bristol Myers (BMY) 3.2%, Gilead Sciences  (GILD) 4.58%, and Glaxo SK (GSK) 4.96%. Roche Holding AG (RHHBY) has also been one of strong holdings over time but can lag due to currency nonetheless up 55.73% over 5 years and 6.89% over one year with a 2.61% yield. Roche has strong R&D with innovation in oncology and clinical diagnostics.

Lily has been a very strong stock over one year up 16.37% but lagging down 10.13% over one month. Lilly has recent good news for its Covid 19 Antibody Treatment. A bit more controversial is Lily’s partnering with a Chinese Company Innovent for development of a lung cancer drug when the FDA requires a new trial. Lilly is also developing new Alzheimer drugs based on monoclonals and has a broad research pipeline. LLY is a bit more expensive than other big pharmas with a Price/sales ratio of 8.1 and a Forward PE of 24.5. Lilly is more aggressive on R&D investment and is a company to be watched for innovation and new products.

Ae also have traded Pfizer (PFE) and its partner BioNTech( BNTX) because of its innovative mRNA vaccine the  Company recently beat on revenues and earnings but the stock is up 47.49% over one year and guidance Is cautious on vaccine revenues going forward, However, revenues for its oral COVID-19 antiviral pill Paxlovid should be strong.

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A big week is coming up with continuing geopolitical risks from Russia and Ukraine conflict, Fed minutes published on Wednesday, more tech earnings, and more inflation data.

It looks like new drug pricing legislation is off the table for now.

Long ABBV, BMY, GILD, PFE, RHHBY, MRK, REGN.

Select Large Cap Biopharmaceutical Metrics

COMPANY Ticker Price Price Price MktCap

% Perform

         
    1/15/18 2/11/22 11/1/19 2022 YTD   FWD Analyst %  
          $B   P/S PE Recom Div  
Abbvie ABBV 100.000 142 81.75 252 4.88 4.57 11.64 2 3.97  
Alexion*(ALXN) ALXN 123.000 182.5 109.38 40.33 n/a 4.56 9.38 2.2  

*acquired by AZN

Amgen   185.000 228.2 221 129 1.44 4.96 11.89 2.5 3.4  
AstraZeneca* AZN 35.000 58 40.34 181 0.36 5.53 15 2 2.4 see ALXN
Biogen BIIB 336.000 214.6 299.2 31.54 -10.56 2.94 13.21 2.3  
Bristol Myers* BMY 63.000 66.88 57.16 145.78 7.27 3.13 8.07 2.1 3.23  
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 67.43 62 77.84 -14.52 2.84 9.46 2.4 4.58  
GlaxoSmithK GSK 38.000 44.3 45 111.76 0.45 2.42 12.59 2.2 4.96  
Eli Lilly LLY 85.000 235.74 113 225.5 -14.65 8.1 24.5 1.66  
Merck MRK 59.000 76.64 84.94 193.59 3.97 10.7 2.2 3.6  
Regeneron REGN 367.000 638.4 310.48 67.1 1.09 4.18 13.53 2.1  
Vertex VRTX 158.000 185.9 233.89 60 6.51 7.93 15.37 2.1  
                       
XBI     93.35 83.66   -16.62          
IBB     130 109.85   -14.78          
FBIOX     16.36 20.26   -15.45          
XLV     130.25 94.87   -7.55          
XPH     43.95 39.47   -4.77          
QQQ     347 201.23   -12.77          
                     
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