The back half of 2022 is already shaping up to be a stock picker's market. Today's mixed trading session in the volatile healthcare sector is a case in point.
For example, shares of the clinical-stage biotech Ocugen (OCGN -1.17%) were down by a hefty 9.5% and Sorrento Therapeutics' (SRNE.Q -8.17%) equity was in the red by 5.62% at 11:02 a.m. ET Thursday. Meanwhile, VBI Vaccines' (VBIV 1.46%) stock price was spiking by a handsome 18.4% at the exact same point in today's midmorning trading session.
What's behind this stark divergence between in the performances of Ocugen/Sorrento and VBI Vaccines shares today? Ocugen and Sorrento's stock prices are likely underwater today due to the headwinds rolling out of the financial sector in the wake of JPMorgan Chase's underwhelming 2022 second-quarter earnings report. The key issue at play is the lender's decision to halt share buybacks for the time being in order to preserve capital ahead of a possible economic recession later this year.
The long and short of it is that recession fears are bad news for smaller, cash-flow-negative biopharma companies like Ocugen and Sorrento. Both of these tiny drugmakers rely on investors being willing to take on a fair amount of risk in a quest to produce market-beating returns on capital.
As the economic outlook dampens, however, investors will surely continue to stick to safe haven plays like dividend stocks and blue chip pharmaceutical companies. So it's not surprising to see Ocugen and Sorrento's stock prices under pressure this morning.
Why is VBI Vaccines bucking this downward trend across healthcare stocks today? Investors appear to be excited by the recent appointment of John Dillman as the company's chief commercial officer. Dillman will be instrumental in leading the launch of VBI's new hepatitis B vaccine, PreHevbrio. This novel hep B shot is forecast to achieve peak sales of $260 million per year by the end of the decade. That's a massive commercial opportunity for a company with a $259 million cap at the moment.
Are any of these healthcare stocks a screaming buy right now? Among the three, I think Sorrento comes across as the most compelling speculative buy. The company has a solid array of COVID-19 products and an intriguing late-stage cancer candidate in play.
That being said, I think aggressive investors may also want to also check out VBI's value proposition. Although the hep B vaccine market is a crowded space, PreHevBrio does sport some noteworthy competitive advantages that might help its uptake.