Biotech stocks are having a bad year with the major biotech ETF trending downward for months now — but at least 3 Nasdaq-traded biotechnology companies are now hitting new 52-week highs: Applied Therapeutics, Ionis Pharmaceuticals and Vertex Pharmaceuticals
VRTX
Although each sector and each stock have other factors, a lot of biotech’s general malaise this year is likely related to the effects of higher interest rates lasting for longer than expected. The anticipated earnings of analysts tend to keep coming in at lower than anticipated and equities then look less attractive.
Here’s how that looks on the daily price chart of the SPDR S&P Biotech ETF, a widely followed benchmark for the sector:
The group’s been down trending since June and is now trading below the March low, a previously significant level of support. Those May through July peaks show a bearish head-and-shoulders pattern. The 50-day moving average (the blue line) in August crossed below the 200-day moving average (the red line), another negative indicator.
Nasdaq Biotechs With New Highs.
Applied Therapeutics is moving higher in price lately despite the general sell-off in the rest of the sector. The company, based in New York, New York, calls itself “a clinical-stage biopharmaceutical company developing a pipeline of novel drug candidates against validated molecular targets in indications of high unmet medical need.”
Market capitalization is $178 million, a smallish figure for a biotech.
Earnings over the past 5 years are negative by 55% and now show growth this year of 47%. Note that it’s definitely a low-priced stock — $2.82 — and that it’s relatively lightly traded with an average daily volume of just 850,000 shares. Like many small biotechs, Applied Therapeutics does not pay a dividend.
The daily price chart is here:
Ionis Pharmaceuticals is working on RNA-targeted therapeutics involving “an antisense oligonucleotide drug discovery platform” directed at serious diseases such as Alzheimer’s and Huntington’s. The company operates from corporate headquarters in Carlsbad, California.
Market capitalization comes to $6.09 billion and the stock is actively traded with average daily volume of 1.01 million shares. This year’s earnings are off by 74%. Analysts estimate next year’s to be down by 3.53%. Raymond James initiated coverage of Ionis with a “strong buy” and a price target of $63.
The daily price chart looks like this:
Vertex Pharmaceuticals develops medicines designed to help those suffering from serious diseases including, for example, cystic fibrosis and diabetes. Founded in 1989, the company began trading on the Nasdaq in 1991. Vertex is headquartered in Boston, Massachusetts.
With a market cap of $96.53 billion, the stock trades at a price-earnings ratio of 28 and a price to free cash flow of 24.89. Earnings this year are down by 2.17% and over the past 5 years, they’re up by 65.26%. William Blair in May initiated coverage of Vertex with an “outperform” rating and a price target of $382.
The biotechnology sector is another area of the stock market where highly selective is outperforming highly diversified.
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