The pullback in biotech and pharmaceutical names is overdone.
The SPDR S&P Biotech ETF (XBI) dropped from about $105.47 to a recent low of about $92. The iShares NASDAQ Biotechnology ETF (IBB) slipped from about $150 to less than $132. Even ProShares Ultra NASDAQ Biotechnology (BIB) dropped from about $68 to a low of $52.
There were a couple of reasons for the decline.
One, markets saw a post-election fizzle. The Dow Jones Industrial Average slipped about 3% and is heading lower again. The S&P 500 dropped about 3%, as the NASDAQ fell by 4%. Two, the biotech sector slipped on fear and uncertainty of what effect Robert Kennedy Jr. being appointed as Head of Health and Human Services could have on the US FDA.
In fact, as noted by Reuters:
“Kennedy has been most vocal about the FDA, an agency that oversees nearly $3 trillion in medicines, food and tobacco products. In interviews and on social media, Kennedy has accused agency staff of doing the bidding of Big Pharma and Big Food. ‘FDA’s war on public health is about to end,” Kennedy wrote on X in late October. “If you work for the FDA and are part of this corrupt system, I have two messages for you: 1. Preserve your records, and 2. Pack your bags.’”
However, a good deal of the uncertainty and fear of his nomination has been priced in.
That being said, investors may want to jump back into oversold biotech and pharmaceutical names, including:
Johnson & Johnson (SYM: JNJ)
After dropping from about $164 to $144, JNJ is excessively oversold and could soar heading into the new year.
It’s also ridiculously over-extended on RSI, MACD and Williams’ %R. From its last traded price of $145.29, we’d like to see it retest $152 initially.
Pfizer (SYM: PFE)
Pfizer is just starting to pivot higher from strong support at around $25 a share.
The company also just raised its dividend to 43 cents a share, which is payable on May 7 to shareholders of record as of January 24. Helping, the company is optimistic about 2025 after posting strong earnings results in its most recent quarter.
SPDR S&P Biotech ETF (SYM: XBI)
There’s also the oversold SPDR S&P Biotech ETF (XBI).
With an expense ratio of 0.35%, the ETF offers exposure to 145 biotech and pharmaceutical names including Gilead Sciences, United Therapeutics, Sarepta Therapeutics, Exact Sciences, and Alnylam Pharmaceuticals to name just a few.
Related Reading: Tiny Biotech Wins $75 Billion Patent
On March 1, 2022, a tiny biotech firm won a patent on a new treatment that has the potential to “Cut & Paste” disease from your body.
The Wall Street Journal reports this company is “transforming medicine.”
Our research proves that anyone who gets in now could earn a 46,751% return >>>
Our research proves that anyone who gets in now could earn a 46,751% return >>>
