Biotech Bonanza: The M&A Theme
Biotechs have led the V-shaped market decline and recovery over the past 2 months A rise in M&A activity after a moribund 2018 has helped the sector to recover faster and positions it for further gains Low in-house R&D productivity and pressure on drug pricing create a difficult environment for pharmaceuticals and another reason for M&A…
Biotech Bonanza: 2019 Outlook
2018 was a harder year than envisioned, even though second-half turbulence was somewhat anticipated The biotechnology sector provided opportunities for attractive returns during 2018 although the late-year decline rapidly masked many of the successes As of December 1, the Nasdaq Biotech Index was up +2%, S&P Biotech Index was down -4%, and the Prudent Biotech…
A Migrating Biotech Bear
Biotech sector achieves the dubious distinction of being amongst the first to slip over the Bear market threshold. Nonetheless, this should be a transitory bear market for biotechs, as the pullback is driven more by systemic issues rather than sector issues. Policy initiatives introduced in October have not diminished the fundamental attractiveness of the sector.…
Biotech Stocks Bloodied But Can Now Drive M&A
The biotech stocks plunge along with the broader market, as the smallcap and midcap biotech stocks retreat -17%. The larger cap biotechs and pharmaceutical companies are performing relatively much better. The performance dichotomy strengthens the argument for potential M&A. A recent proposal by the Health and Human Services Secretary to bring greater price transparency is not expected…
The Biotech Conundrum!
Biotech stocks are performing well with double-digit gains for key indexes so far in 2018. Nonetheless, the biotech stock index returns do not appear to be favorable to the risk that biotech investors assume when compared to the performance of broad-based indexes. The drug pricing issue remains a conundrum that will persist and affect valuations.…
Small Caps Are Rising. Biotech Stocks Can’t Be Far Behind!
While much attention is being riveted on the S&P 500 new all-time high eclipsing the January one, small caps accomplished that in May. Small caps are in their next leg up as they record new all-time highs, once again leading the broader indexes. Biotech stocks, dominated by small and midcaps, have been closely tracking small cap index…
Biotech Stocks: Tariff Safe And Building Momentum
The Nasdaq Biotechnology Index is poised to make a 52-week high and most likely an all-time high shortly thereafter. Biotech stocks are more insulated from the biggest concern for the market – the tariffs – than most industries. The rapid pace of new advancements continues to maintain the excitement for Biotechs. Biotech is poised to…
ASCO Delivers A Biotech Boost, As The Market Waits On Trump-Kim And The Fed
ASCO provides a boost to many oncology biotech stocks. Small and midcap biotech stock index remains poised near high. Federal Reserve to raise rates, but not deviate much from the last statement. Trump-Kim summit has the potential to be market-moving, if adverse, but most likely it will be a non-event. Portfolio exposure to the speculative…
4 Reasons & An Upcoming Catalyst to Move Biotech Stocks Higher
The market is becoming more comfortable with risk as evidenced by the rise of the small cap index to a new all-time high. Biotechs have lagged in market performance even though they are in a better position than at any other time in the last three years. ASCO can provide a strong and positive news…
Biotech Stocks Emerge Unscathed And Ready To Go
The blueprint to lower drug prices leaves Biotechs unscathed and can be a net positive for the biopharma industry. A big cloud has cleared and this will assist biotech valuations going forward particularly as the market firms up. An improving investment climate matched with overarching industry trends can favor biotechs to record a sharp rise…
Biotech Stocks, Whipsawed By Volatility, Remain Well-Positioned
Biotechnology is doing what it does – being volatile. But that’s normal, and the primary trend for biotechs remains positive Industry dynamics continue to favor brighter prospects Mergers & Acquisitions (M&A) is a uniquely favorable element for the biotech industry that enhances upside potential A prudent exposure to the small cap and mid cap segment…
Biotech Stocks Approaching New Waters
Biotech stocks are approaching highs achieved in 2015, as reflected by the Nasdaq Biotech Index. New science is opening up great opportunities with boundless potential. The biotech sector also continues to benefit from potential M&A, faster drug approvals, strong risk appetite, and improving public sentiment. Relatively harder to outperform broader market this year compared to…
Biotech Stocks: Still Positioned For More Gains
Sharp market correction triggered by interest rate concerns creates opportunities Market transitions into a more typical rally and pullback mode, with a continued firm uptrend Biotech stocks are experiencing highly favorable tailwinds that continue to boost the sector Big Pharma has to build out pipelines in new areas and M&A is a compelling alternative Growing…
Biotech: The Gates Begin To Open
Biotech sector starts off the year strong with multiple acquisitions and partnerships, beginning to usher in the long-awaited M&A boom. Furthermore, unlike last October, earnings season this time has opened strongly and is not hurting the building biotech momentum. Sector index (IBB) positioned to make new all-time highs in the near future, with the possibility…
2018 Outlook – Biotech Bonanza: Biotech Stocks To Keep Shining
December 20, 2017 Biotechnology delivered a solid year in 2017, overcoming the poor performance in 2016. Multiple reasons for Biotechs to continue performing strongly in 2018. On a relative basis, Biotechs represent a good opportunity as the sector remains ~20% below its all-time high. Acquisitions may finally become a biotech theme in 2018. Many promising…
Biotech: Opportunity Ahead!
November 30, 2017 Biotechnology sector has corrected over 10%. Poor earnings of larger biotechs knocked the wind out of the sector. An imminent catalyst can push the sector higher, recovering recent losses and possibly make new 52-week highs. Mid cap and small cap companies well-positioned for gains The months of October and November have…
Biotech Bonanza: A Key Piece Falls In Place!
September 07, 2017 Biotechnology begins to lead the market Acquisition sparks a rally in biotech stocks FDA drug approvals pick up pace Elevated broader market risk during September and October Biotech remains a vital sector for portfolio holdings this year and remains poised for further gains, even with the possibility of higher broader market volatility…
Biotech Bonanza: The Next Leg Up for Biotech Stocks!
July 26, 2017 FDA’s new focus on accelerating drug approvals creates a valuation enhancing environment Sentiment change with the approval of innovative life-saving drug class targeting cancer Earnings season to provide the ramp for further gains Recent Federal Reserve possibility of a policy reset preserves the overall favorable environment Biggest risks are the various Presidential…
Biotech Stocks Best Chance for Breakout, Gets Even Better!
June 21, 2017 An Executive Order expected to be issued shortly clarifying health care policy. The measures outlined are expected to be industry-friendly. Price negotiation for Medicare is not on the table, thus removing a big burden on valuations. The Executive Order will prove to be a major tonic for biotechnology. Clinical breakthroughs and easing…
Biotech’s Best Chance!
June 8, 2017 A possible “Comey Rally” Favorable market environment for Biotechs Positive news flow from ASCO Potential catalysts – M&A, broader market advance, and health care policy clarity Biotechnology sector has flirted with new 52-week highs multiple times this year, only to retreat. The sector, as represented by the Nasdaq Biotechnology Index ETF…
Biotech Stocks – Approaching An Inflection Point
Biotechs are performing well this year even in an uncertain environment. Policy clarity is important and we may be approaching an inflection point. A favorable backdrop for biotech stocks to push higher. Investors should maintain some exposure to this volatile but promising sector in 2017. Over the past month, the focus of the lawmakers…
Positives and Momentum Build for Biotechnology!
March 14, 1017 Trump nominates Scott Gottlieb for FDA Commissioner Appears to settle debate on regulation gutting vs streamlining. Medicare pricing negotiation appears to be not on the table. Big positives for the biotechnology sector A new leader and, we believe, approaching clarity on Medicare pricing negotiations are two strong positives for the…
Biotech Bonanza: Breaking New Ground!
March 06, 2017 Biotechnology sector finally recorded a 52-week high, lagging the broader market by 8-months Early stages of the rally, with multiple reasons to drive further highs in the months ahead. Key drivers appear to be improving. Exposure to the sector becomes important to outperform the broader market. Biotechnology has started off the year…
Biotechnology: Ready for New Highs!
February 09, 2017 Biotechs and pharmas remain under the cloud of uncertain policy But recent developments increase confidence on the regulatory front Sufficient biotech sector drivers now exist to create momentum for a breakout Biotech to make 52-weeks highs in the first quarter and deliver further gains beyond After an extended period of…
Biotechnology: Can Trump Be A Catalyst For M&A?
January 24, 2017 Trump indicts the industry on “getting away with murder.” Pharmaceutical industry shows early signs of a shift towards self-regulation. Innovation can be spurred by acquisitions. Trump’s activism can perhaps be helpful to the Biotechnology Sector. President Donald Trump had made his intention clear in a Time magazine interview in December 2016, mentioning…
Biotechnology: Is 2017 A Bonanza Year?
January 11, 2017 Biotechnology sector was one of the worst performing sectors in 2016. Political uncertainty has diminished but is still impairing investor confidence Signs are present for the sector to breakout this year. M&A can catalyze momentum and improve investor confidence. The Biotechnology sector was one of the weakest performers in the stock market…
Healthcare Executives Are The Highest Paid
January 10, 2017 The Biotechnology sector’s investment performance suffered last year with an over -21% decline. But don’t let that dissuade you from joining drugmaker companies. According to a recent Bloomberg Pay Index, which ranks executives based on awarded compensation, executives at healthcare and pharmaceuticals reaped the highest pay packages. Here’s an interesting graphic which distributes…
Biotechnology Stocks Struck By Bolt From Trump Tower
December 08, 2017 The pharmaceuticals and biotechnology stocks retreated sharply today, as Trump was quoted in a Time magazine “Person of the Year” article as being upset about the high drug prices and doing something about them. The Biotechnology index represented by large-cap focused IBB shrank 3%, and the midcap/smallcap focused XBI retreated 4% for…
Biotech Bonanza – 5 Reasons For Biotech Stocks To Shine. 2017 Outlook
The pendulum has swung in the other direction, and Biotechnology is poised to become a leading sector heading into 2017 The diminished risk of policy uncertainty positions the biotech sector at an advantage compared to many other sectors and the broader market Strong uptick in risk appetite creates opportunity for further strong gains in smallcaps and…
Biotech Stocks Overreact, Fearing An Election “Sweep”
Sharp decline in Biotech Stocks last week was a reaction to political winds. Biotechs fear an election sweep giving control of Congress and White House to a single-party. We believe control of Congress will be retained by incumbent party or at worst split evenly. Overreaction to a low probability outcome creates a buying opportunity Biotech…
Yellen & Clinton Combo To Take Stock Market Higher
SEPTEMBER 29, 2016 Chair Janet Yellen delivers an unchanged monetary policy soothing the market. Hillary Clinton appears to regain her footing in the presidential elections soothing global markets. Technology earnings to be strong and supportive of market valuations, boding well for Nasdaq. Biotechnology breaks higher as M&A activity rises The market trend remains higher. THIS…
Biotech Stocks: No Easy Way Out, But Almost There!
SEPTEMBER 15, 2016 Difficult year for Biotech stocks so far with the sector down -17% YTD Fundamentally the biotech sector is gaining strength Meaningful policy clarity to be achieved in 6-weeks based on election outcome Biotechnology is positioned to have a strong fourth quarter if election outcome is sector-favorable The biotech stocks have been facing an uphill task…
Is Biotechnology Finally Ready To Move Higher?
JULY 25, 2016 Broader market rally to new highs has raised the probability of a Biotechnology breakout. After a nearly 6-month trading range consolidation, the sector appears poised to make an attempt towards new YTD highs. Earnings season can be the catalyst to push the sector higher and past its previous high-point. If no adverse…
Biotechnology – The Perfect Yo-Yo
JULY 06, 2016 The Biotechnology Sector Has Been Range-bound this year. Conditions for a move higher were optimal, till Brexit happened. The generally positive stock market backdrop can help the sector climb higher, but there is more work to be done. The Biotechnology or Biotech sector continues to struggle with its personal bear market,…
Brexit Doesn’t Mean An Exit On Stocks
June 30, 2016 One thing that became certain after the British referendum favoring an Exit from the Eurozone, popularly referred to as Brexit for “British Exit,” is a shifting of the timeline for Federal Reserve’s potential interest rate increases. The July increase is most likely off the table, and also now potentially one increase, down…
Biotechnology: Clearer Skies, Ready To Move Higher
JUNE 03, 2016 The biotech sector is well-positioned to move higher now than at any other time this year Consolidation activity has begin to forcefully rise which has spurred investor interest Sector sentiment has improved as well, and should be further helped by the ongoing ASCO conference Investors should consider assuming and raising their exposure…
Biotechnology: Entering A Pocket Of Turbulence
The biotechnology sector performed strongly during March and April. Some sector-specific and market-related factors are clouding the positive narrative of the Biotechnology sector. Even though near-term caution is advisable, we anticipate these clouds to be transient and things to become clearer as the month passes. The biotechnology or biotech sector, represented by ETF IBB which…
The Thundering Quant Bulls
APRIL 21, 2016 Yesterday, April 20, the S&P500 reached a critical stock market technical level of 2100. This is the level around which the index had peaked in November 2015. Why is this level important for stock market investors? Many of the quantitative funds use price levels as a key input in their systematic investment models. An upside…
Our Investing Biases Cost Us Investment Returns!
APRIL 07, 2016 We are influenced by the pool of emotions and experiences accumulated over our lifetime, which create certain preferences or proclivities in our thinking. We lean on these tendencies, when making our decisions, even when that results in an irrational or unproductive decision. There is a whole behavioral field of study in psychology around this…
Biotechnology Stocks Poised To Move Higher!
MARCH 28, 2016 The Biotechnology sector has not participated in the recent market rise for reasons which are losing their grip We believe the process of bottoming out has occurred, and the sector is now positioned for future gains into Summer Federal Reserve’s policy is supportive of higher valuations It is time to begin buying…
It’s The Fed’s Move Once Again!
Stock Market Outlook
MARCH 15, 2016 Federal Reserve will update its “dot plot” to reflect the median rate hikes for 2016, and that number is widely expected to come down to 3 from 4 A more settled interest rate picture, and continuing economic growth should create an environment for a durable rally into the year We believe the next…
Is The Biotech Sector Bottoming Out?
FEBRUARY 01, 2016 Biotech sector has corrected 35% since its peak in July 2015 Worst appears to be over and we are close to a Biotech bottom, if not there yet More consolidation may be required, but it’s time to freshen up the Biotech stocks list The Biotech sector is one of the most dynamic…
Don’t Go Chasing The Market Lows!
JANUARY 15, 2016 Don’t Go Chasing Market Lows … they just keep getting lower! Biotechs represent a sector with tremendous potential. At the same time, it’s a highly volatile sector and quite sensitive to market conditions. As we experience a resetting of market expectations following a change in the Federal Reserve policy, it’s quite tempting…
The Fed’s Done For Now – Stock Market And Small Cap Viewpoint For 2016
JANUARY 07, 2016 We anticipate the market decline to provide fresh legs for a new rally later in the first quarter and early second quarter. For the year, we anticipate a positive year, with single-digit returns for S&P 500 and Nasdaq. The market expectation we laid out in our January 2015 commentary, and reiterated in…
Biotech Stocks Can’t Be Ignored!
DECEMBER 2015 Biotech is a sector that has outperformed the market meaningfully over a market cycle The general perception of the sector being highly risky overlooks a portfolio approach as well as risk measures that suggest prudent exposure to biotech can enhance returns The message is clear – Don’t Ignore Biotech Since the Great Recession,…