Biotech Stocks May Have Finally Been Unleashed
Michael Kramer and the Clients of Mott Capital Own CELG
Stocks continued to move higher, led by the Biotech’s, which were up by about 3 percent. There’s something we haven’t said in a long time. The highly anticipated speech regarding drug prices by the President didn’t seem to be as bad as many had feared. Increasing competition, deregulation, cutting out the middlemen, is at the core of the proposals, based on my interpretation.
The drug pricing overhang had plagued this sector since September 2015, when Hillary Clinton made it a political point in the race for President. If this is the worst of it, I think the group might have much further to rise. Companies like Celgene, Gilead, Biogen, and Amgen are all trading at some of their lowest earnings multiples in years. Albeit for good reasons in some cases, but some of the valuations seem excessively low.
The details aren’t fully known yet, and what ends up getting put into law may be very different. But just knowing the blueprint for how they plan to tackle drug pricing might unleash the sector from the shackles of the past three years.
I think the group is likely heading higher.
The S&P 500 continues to rally, and finished near the highs at 2727, up about 2.5 percent. The setup continues to look strong.
Technology stocks continue to look strong as well and so do consumer stocks, even though Amazon still didn’t break out. $1620 is proving, for now, to be tough for Amazon. Now that I’m calling for it to rise, it will probably go down! Ugh. We shall see.
I’m surprised Nvidia was down today. But I also do not think today’s price actions mean the stock is going lower. Shares held firmly above support around $253. The results were stunning, and this probably keeps working higher.
Amgen shares continue to look strong as well, with a well-defined double bottom, and what looks like a solid path towards $178 to $180 range.
Gilead also looks as if it could see a rise to about $72.
Biogen also looks like it is on the cusp of a big breakout.
That is going to be it for today.
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