Sector Shift Stalls Healthcare Stocks But Biotech Shows Gains In January

Stethoscope, Hospital, Doctor, Health, Medicine

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  • Healthcare stocks were weak last week with the XLV down 2.2% YTD.
  • Small cap biotech stocks remain frothy with good gains.
  • Trading this week can be perilous ahead of Fed and major earnings reports.

Last week saw big 4% gains in the Nasdaq-100 (QQQ)and Infotech stocks aa swell as major sectors across the board. Our big winners in 2022 have reversed and are weak in 2023 with ABBV down 9.68% and MRK down 4.3% YTD. Concerns about sales growth from blockbuster drugs such as Humira from Abbvie and Keytruda from Merck curbed buyers. But Abbvie did a good job at JPM23 showing how the Company expanded their pipeline.  UNH also took a 10% hit since mid -December on downgrades and earnings revisions. But all three stocks remain core holdings longer term in a healthcare  portfolio. Our recent small cap trades are shown in this post show big gains from 2022.

Biotech stocks are off to a great start in 2023 with the IBB up 4.5% and the XBI up 7.7%. Small cap speculative life science stocks have made big run-ups in 2023 maybe because of tax selling late in 2022 and expectations of less aggressive Fed after this weeks’ 0.25% rate rise. Some macro analysts have cautioned traders on speculation in these stocks saying Powell might actually call them out!! The problem with Fed Meetings is the Q&A where maestro Powell may go off script and create volatility in the markets.

Stocks are weak across the screen today but GE Healthcare was up over 3% to $72 level today the spinout from parent GE doing very well since JPM23. Keep in the back of your mind that the Biden Administration has a plan in September to target companies for excessive pricing through legislation. Regeneron (REGN) was down 1% today despite news on Dupixent and an upgrade by Cowen with targets in mid $800s.

We are all annoyed by it but yes its all about a “soft landing” and the Fed.

Model                      
PORTFOLIO                      
    2020   2020 2020 2021 2022 2023      
Stock/ETF Ticker Price Wgt Price   Price P 1Y Price YTD  
    10/25 % 12/31 % Perf 12/31/21 12/31/22 %Perf 1/28 % Perf  
                       
iShares NAZ Bio IBB* 136 20 151.5 25.7 152.62 130.55 10.96 137.23 4.52  
                       
iShares Russell 2k IWM 163 10 196.4 18.3 222.45 174.36 -1 189.58 8.73  
Merck* MRK 80 10 81.77 -10 76.64 110.81 30.78 105.38 -5.02  
United Health UNH 330 20 350.7 27.19 502 530.27 5.3 486.05 -8.32  
SPDR S&P Bio XBI 117 10 140.8 48 111.96 83 4.54 89.39 7.7  
Healthcare SPDR XLV 108 20 113.4 14.71 140.89 135.88 3.9 132.86 -2.2  
T.Rowe Hlth Sci PRHSX n/a 5 99.65 n/a 104 89 3.71 90.08 0.29  
iShares U.S MedT IHI 50 5 54.83   65.85 52.57 -4.15 54.06 2.83  
MedTech* ABT new 5 123.5   127.46 109.83 -8.71 109.95 0.15  
                       
Tracking Comp                      
                       
ARK Genomic ARKG     93.26   61.24 28.23 -22.57 34 20.65  
Direx3X Bull LABU           7.66 -43.94 8.51 20.37  
FIDO Biotech FBIOX     25.18   19.35 16.04 10.95 16.82 3.32  
FiIDO MEDtech FSMEX     76.15   83.18 61.58 -5.14 63.88 3.73  
DOW DIA     310   363.32 331.34 -0.57 339.61 2.5  
S&P 500 SPY     379   475 382.41 -5.93 405.68 6.08  
NASDAQ-100 QQQ     315   397.85 266.33 -13.15 296.26 11.26  
                       
Top Biopharmas                      
                       
Abbvie ABBV           161.64 7.58 146.28 (9..49)  
Bristol Myers Sq BMY           71.58 13.45 72.45 (0.690  
Gilead Sci GILD           85.39 24.47 83.73 -2.47  
Eli Lilly LLY           362.94 44.52 342.1 -6.49  
Merck MRK           110.94 30.78 105.38 -5.02  
Regeneron REGN           721.7 22.03 742.83 -2.96  
Vertex VRTX           288.78 40.85 321.45 11.31  
                 

More By This Author:

Healthcare Sector Is Lagging As We Enter 2022 Earnings Season
J.P.Morgan Healthcare Conference JPM23: Biotech Rally Favors Smaller Caps
Nice Gains During JPM23 Week: Benign CPI Report Brings Hope For A “Soft Landing”

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