Biotechs Buffeted By Trade Talk,Rising Rates and Political Drama
Technicals Look Favorable for H1 2018
Remain Bullish Despite Uncertainties of the News Cycle
Biotechs outperform in 2018 having recovered most of their losses from last week’s volatility caused by dire tariff talk and higher interest rates, raising concerns about the impact on global growth. Tariffs are basically taxes and can create many losers in the U.S. economy especially autos, energy and even the defense industry. Should trade war talk and other political concerns ease, investors will get back to the basics of life science investing particularly M&A, product pipelines and clinical milestones. In the meantime technology and biotechnology are poised for a rebound off February lows. Here is performance over the past five days and YTD for key ETFs, outperforming most major indices:
Yesterday biotech rebounded across the board with not much significant news and the Rayno Biopharmaceutical Portfolio continues to do well despite the February sell-off.
Large caps rallied with Amgen (AMGN) up 2.73%, Roche ADR (RHHBY) up 2.4% both on our focus list. Gilead Sciences (GILD) was down 0.98% but was up after hours on a Phase 3 study with Biktarvy (R) on adult women with HIV infection.
Celgene (CELG) is still struggling at the $89 level but off its recent lows. Three analysts have downgraded the stock to “hold” over past 3 months.There is value here for long-term investors but we first need to get through another quarter of earnings to shake out any more bad news. Keep in mind that the Celgene tender offer at $87 for Juno Therapeutics (JUNO) has closed on Friday.
Many mid-caps were strong today which is a bullish sign:ALNY BLUE INCY NBIX SGEN TSRO. bluebird bio (BLUE), our top speculative pick in gene therapy and CAR-T technology, was up 4.5% and is now up 21% YTD. Small caps were in a green screen mode. We recently added Karyopharm Therapeutics (KPTI) and the XBI as trades.