Volatility Hits Large Cap Biopharma: Active Rebalancing May Be Required

VOLATILITY ROCKS LARGE CAP BIOPHARMA STOCKS

Volatility in the market has finally shuffled the leaders in large cap biopharma : LLY and REGN.

Healthcare stocks are down 3.57% MTD. Are they no longer a defensive play?

Seasonality favors SMID caps for active traders: XBI.

A bit of earnings and election jitters roiled the market last week reordering  the leaderboard in biopharma stocks. Some of the mighty large caps broke their momentum like Eli Lilly  down over 8% for the week on an earnings miss related to a supply/demand or distribution channel imbalance. And one of our favs Regeneron down over 9% got clipped by slowing revenue growth from their new higher dose Eylea HD, starting to feel competition from biosimilars and Roche’s Vabysmo. Still revenues for the Eylea brand grew  ( recorded from Sanofi) grew 23% to $3.82B, compared tp 2023 Q3 sales. After the stock broke $1000 to$1200 in September a few analysts gave caution notes and downgrades so you did have a chance to lighten up. Last week looks like capitulated selling at $843. We trimmed both stocks a little based on technicals.Our best pick Abbvie delivered last week up 8% but we had to trim LLY. We also sold as we previously noted because of China issues Next week we get reports from our other top holdings Gilead Sciences and Vertex Pharmaceuticals.We also hold for the longer term Pfizer () in the 28-29 range that pays a ~5.6% dividend. We think all the bad news is out and the stock can move to the mid 30s.It’s interesting to note that the  () is one of the best performers this year up over 20% YTD through astute stock picking. The IBB which is a mixed weighted biotech ETF is up only 5% YTD apparently missed the ABBV move. The sector can come back strong next week because of 8% positions in and .Here is  after Q2 earnings. Awaiting MRK and VRTX on NOV 4.We currently hold and actively trade the XBI because of its strong momentum when the market is in a  rally mode.(Click on image to enlarge)Its a good time to review your SMID cap portfolio as we get into an active reporting week.. Many earnings reports are still coming next week. Stocks to watch:  CRMD, CRSP, DNLI, ILMN, NTRA. PACB….LONG in order of weighting: ABBV, PFE, LLY, VRTX, GILD, REGN, RHHBY, MRK; FBIOX,XBI.

                              Top Biopharmas *           2022 11/23 11/2/24 %YTD 5 yr % total 1 mo. week                                 Abbvie ABBV *         161.64 138.59 203.55 31.35 148.99 3.35 8.36   Amgen AMGN               319.22 10.83 46.46 -0.36 0.71   Astra Zeneca AZN           68 63.17 71.42 6.04 47.59 -9.22 -4.84   Bristol Myers Sq BMY           71.05 50.61 54.32 5.87 0.36 2.88 4.92   Gilead Sci GILD *         85.39 75.92 89.52 10.49 38.43 6.64 0.57   Eli Lilly LLY *         447.71 597.71 818.93 40.49 627.87 -7.41 -8.26   Merck MRK *         110.95 101.39 101.68 -6.55 25.7 -11.21 -2.02   Pfizer PFE *         51.24 29.48 28.09 -2.43 -22.88 -2.02 -1.27   Regeneron REGN *         725 798.94 843.6 -3.95 171.71 -19.42 -9.58   Vertex VRTX *         288.78 373.65 471.12 15.79 134.46 0.29 -1.38                                 FUNDS                             FIDO Biotech FBIOX     25.18   19.35 16.04 14.39 21.48 20.47 6.02 1.61 –   JanusHendLifeSc JNGLX               78.8 13.99 34.72 -1.71 –   FiDO MEDtech FSMEX     76.15   83.18 60.04 51.64 66.79 7.8 17.75 -1.01 –   ETFs                             iShares NAZ Bio IBB 136 10 151.5 25.7 152.62 130.55 115.53 142.78 5.1 29.98 -1.37 0.9   SPDR S&P Bio XBI 117 10 140.8 48 111.96 83 66.95 99.27 11.18 18.66 1.33 2.18   Healthcare SPDR XLV 108 25 113.4 14.71 140.89 135.88 126.27 147.74 8.33 55.73 -3.57

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