Large Cap Biopharmaceuticals: Core Holdings For Your Portfolio

By Rod Raynovitch of Raygent.com
Monday, October 3, 2022 5:47 PM EST

Dna, Genetic Material, Helix, Proteins, Biology

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Now that some clarity is apparent for drug pricing legislation you should have a few large-cap biopharmaceutical stocks in your portfolio. Large-cap biotech provide value, growth, and dividends with some protection from MACRO volatility. Biotech is a play on innovation in an era of molecular medicine.

Here are some general takeaways:

  1. Top winners YTD among stocks we hold in our portfolio are: VRTX LLY BMY MRK REGN all easily outperforming the IBB down over 23% YTD. Note upgrades LLY, MRK, REGN, and VRTX.
  2. Biogen (BIIB) soared up 35% MTD and now up 10% YTD on Alzheimers drug clinical study results. partnered with Eisai.  Monoclonal antibody technology targeting amyloid in the brain.
  3. Biopharmas are off their August highs because of a few downgrades: ABBV, AZN. BMY, and the general market weakness in September.
  4. Valuations still look reasonable compared to other sectors. Price to Sales ratio genially under 5 with Forward  PEs in the teens. However, we’ll need Q4 guidance and guidance to confirm these numbers.
  5. Gilead Sciences (GILD) is a laggard down 15% but has an FWD PE of 8.6 and a PE of 18.8. Dividend Yield is an attractive 4.73%
  6. The large cap biotech sector is slightly more volatile lately be sure to monitor the news and moving averages like the 200-day and 50-day. The gap between winners and losers is greater as well.
  7. LLY is one of the most expensive stocks in the group because of high expectations of potential blockbuster drugs like Mounjaro.
  8. The tape of selective SMID stocks suggest a rally in Q4 triggered by M&A.
Company Ticker Price Price Price MktCap % Perf            
  COMPANY 1/15/18 9/30/22 11/1/19 2022 YTD   FWD Analyst % 52 week high  
          $B   P/S PE Recom Div    
Abbvie ABBV 100.000 134.21 81.75 237.2 -0.88 4.14 11.28 2.2d 4.2 175.92  
Alexion*(ALXN) ALXN 123.000 182.5 109.38 40.33 n/a 4.56 9.38 2.2  

*acquired by AZN

  
Amgen AMGN 185.000 225.4 221 121 0.19 4.59 12.04 2.7 3.44 258.45  
AstraZeneca* AZN 35.000 54.8 40.34 174.2 -5.85 3.96 15 1.7d 3.46 71.7  
Biogen BIIB 336.000 267 299.2 39.7 11.29 3.73 17 2.4u – 351.86  
Bristol Myers* BMY 63.000 71 57.16 153 14 3.25 8.87 2.3d 3.04 80.59  
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 66.33 61.69 78.44 -15 2.85 9.53 2.6 4.73 74  
GlaxoSmithK* GSK 38.000 29.43 45 59.53 -33.3 1.62 8.45 2.2 6.3 *46.97  
Eli Lilly LLY 85.000 323.35 113 306.7 17 10.55 34.22 2u 1.21 330  
Merck MRK 59.000 86 78 220 12.37 3.85 11.6 2.2u 3.2 91.05  
Regeneron REGN 367.000 689 310.48 74 9.08 5.21 16 2.3u – 747.42  
Vertex VRTX 158.000 289.5 196 75 31.85 8.98 18.7 2.1u – 300  
                         
      9/30/22 11/19   %YTD

MTD%

       2022 high  
XBI     79.32 83.66   -29.15 -5.23       111.96  
IBB     116.96 109.85   -23.37 -3.17       152.62  
FBIOX     15.49 20.26   -19.96 -2.15       19.67  
XLV     121.11 221   -14 -2.93       143.42  
XPH     40.16 39.47   -12.98 -3.35       46.15  
UNH     505 252   0.58 -2.75       550  
QQQ     267.26 201.23   -32.82 -10.7       397.85  
                         
   

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Can Healthcare Stocks Continue To Outperform?
Healthcare Sector Still Looks Good But Lacks Momentum
Whither Small Caps After Fed’s Tough Talk?

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