Busted Biotech Stocks: What’s the Next Trade?

Rayno Life Science Portfolio Update: Needs Re-Balancing

Rayno Life Science Stocks had a good run until early March 2018 when most life science stocks were hit hard. With all the bad news from recent clinical data ABBV, ALKS and uncertainties from macro and policy issues (tariffs+ rising rates), the market does not care about Company fundamentals. Follow the technicals until we get an update from Q1 earnings. Our favorite ETF the NYSE Area Biotechnology Index (XBI) hovered just above support of $83 although it is still up 23.48% over 12 months. One of our top speculative picks bluebird bio (BLUE) hit a new high of before dropping 73 points to the $160 level!

Here are some trades to consider assuming technicals hold at the current levels:

  • Buy and hold for the long term, the worst 12 month Large Cap Biopharma performers assuming that a turnaround from clinical data or a deal will help them in 2018: Biogen, Inc. (BIIB) at $265, Celgene Corp (CELG) at $88 and Regeneron Pharmaceuticals (REGN) at $327. IBB bottoming process at $102 level.
  • Buy XBI at most recent technical support of $83-84 for a 2-3 point trade betting on a rally. Downside risk is to $80.
  • Hold for the long term Bristol-Myers Squibb Co.(BMY) at $62 and Gilead Sciences, Inc (GILD) at $74. Both pay dividends.
  • We want to add more speculative picks like bluebird bio, Inc. (BLUE) or Mid-Cap Stocks with deal potential in the coming weeks if the sector can find its ski legs.
  • Biotech stocks are really being hurt by overall negative market sentiment and a de-risking mentality rather than industry specific news.
  • Rayno Life Science Picks- Data from 4/3/18

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