5 Top Biotech Stocks That Look Vulnerable in 2018
Published: Jan 09, 2018 By Mark Terry
Although the stock market seems to be moving up at the beginning of this year, the U.S. equities market appears more mixed, with healthcare stocks in particular appearing more volatile. Anthony Mirhaydari, writing for InvestorPlace, notes, “Biotech, in particular, is getting hit after a 10-percent-plus rally out of the mid-November low for the iShares Biotech, threatening to move below its 20-day moving average. That would set up another retest of its 200-day moving average down near $104, which would be worth a decline of around four percent from current levels.”
With that in mind, Mirhaydari looks at five biotech companies investors might consider selling while their stocks are high.
Barron’s noted that yesterday the company’s stock dropped to the bottom of the S&P 500, losing about 3.7 percent of value.
Mirhaydari writes, “Biogen shares are falling away from overhead resistance near $350 associated with its mid-October high. Watch for a move back to the October-December consolidation range near $310 which could set up a nice buying opportunity for another breakout attempt.”
Shares are currently trading for $332.16.
Yesterday, Regeneron and Paris-based Sanofi announced they would invest another $1 billion into cemiplimab for a variety of cancers. The drug is currently being evaluated as a monotherapy and in combination with others in advanced skin cancers, non-small cell lung cancer, cervical cancer and lymphomas. The companies stated, “The investment in cemiplimab will be increased to $1.64 billion, an increase of approximately $1 billion over the initial 2015 agreement and Sanofi and Regeneron will continue to equally fund cemiplimab development.”
Mirhaydari notes that the company stock is “moving lower once more, capping a downtrend going back to July that’s totaled more than 30 percent. This pushes shares back into a consolidation range going back to 2016 near $360, a level that should hold.”
Regeneron shares are currently trading for $375.72.
On Dec. 26, 2017, the company announced that Japan’s Ministry of Health, Labour and Welfare (MHLW) approved Solirisi (eculizumab) to treat patients with generalized myasthenia gravis (gMG) who are anti-acetylcholine receptor (AChR) antibody-positive and whose symptoms are difficult to control with high-dose intravenous immunoglobulin (IVIG) therapy or plasmapheresis (PLEX).
Analysts with Raymond James recently downgraded the company from “Strong Buy” to “Outperform.” This appears to be because after three months of moving upward, the company’s shares appear to be slowing.
Company stocks are currently trading for $121.23.
The company presented unaudited 2017 results at the J.P. Morgan Healthcare Conference yesterday, with overall good results, reporting a 57 percent year-over-year increase in earnings per share. Other analysts seem to feel their reports are mixed, probably because the company’s overreliance on Revlimid for about two-thirds of its sales.
Mirhaydari writes, “The company will next report on Jan. 25 before the bell. Analysts are looking for earnings of $1.93 per share on revenues of $3.5 billion. When the company last reported on Oct. 26, earnings of $1.91 beat estimates by four cents on a 10.2 percent rise in revenues.”
Shares are currently trading for $104.61.
On Jan. 5, 2018, the U.S. Food and Drug Administration (FDA) approved the company’s supplemental Biologics License Application (sBLA) for Xgeva (denosumab) for the prevention of skeletal-related events in patients with bone metastases from solid tumors to include patients with multiple myeloma.
Mirhaydarai notes that company stocks are holding steady, “but are vulnerable to a decline to the 200-day moving average near $170, which would be worth a decline of roughly six percent from current levels—continuing a sideways channel near current levels that’s been in place since late 2014.”
Shares are currently trading for $181.87.