Large Cap Biotech Stocks Get Traction From Revenue Growth
Nice Rally today on Biopharma Earnings: BIIB, BMY,GILD
Strong Overall Biotech Tape Today, with Healthcare As Leading Sector.
Biopharma and healthcare stocks firmed up today helped by Biogen (BIIB) earnings last week and today again with Gilead Sciences (GILD). Over the past month there was a rotation out of drug and healthcare stocks into technology and industrials primarily because of the overhanging cloud of pricing. Although the concerns of weaker drug pricing remain longer term, healthcare remains one of the few growth sectors in the current economy. Although the Gilead Sciences (GILD) conference call dropped the stock over 2% after hours over concerns about HCV growth, the Company topped forecasts for $2.87B on the bottom line and $8.3B on the top line with net product dales of $30-31B for 2015. But the new normal as we can see from the AAPL earnings “beat” is that investors are cautious and out of the MoMo mode.
Bristol -Myers Squibb (BMY) also beat in Q3 with a profit of $760M on Revenues of $4.07B. Opdivo grew by $304M with significant other milestones for “immuno-oncology”.
The green screen dominated today with many high fliers on the move like AGIO, INCY, JUNO and PBYI. The IBB a large cap dominated ETF was up 3.21% and now 5.61% over the choppy, bearish one month period and 8% YTD. Although we are still about 9% UNDER September 2015 highs (way below July highs) we are well into the bottoming process for the sector. The XBI rallied as well up 2.19% and up 8.33% YTD.
Amgen (AMGN) is up for tomorrow.
The IBB closed the performance gap with the leader QQQ to 1.5% points YTD.
Also of note was a huge move up 10% in laggard Cepheid (CPHD) to $33.82.The 52 week high was $63.69. Cepheid missed its Q3 forecast but “bottom fishers” came in today with good volume of 1.8M shares. Cepheid trades at a P/S of 4.76, a good value over the years given its M&A potential.
Disclosure: None.
With the high level of volatility in healthcare and biotech stocks. Don't try to cherry pick, I still like IBB as a safer investment choice. It has some of the biggest companies as part of its portfolio but spreads the risk by not over allocating in any one company. Its top four allocations (by percentage allocation) are:
Amgen Inc. 8.76%, Celgene Corp. 8.73%, Regeneron Pharm. 8.69 % Gilead Sciences 8.65% and Biogen 8.21%.
Year to date, it has returned 7.31% but over 5 years it has returned 279%. Now obviously there will good and bad years but I think this ETF is one to hold for the long hall.