Biotech stocks as a whole tend to underperform after the annual American Society of Clinical Oncology (ASCO) conference in June. Many investors buy biotech up to the conference, which has many releases of clinical data, and then some investors lose part of their excitement. But one month later (i.e., around now), there may be opportunities for gains.
Marc Lichtenfeld of The Oxford Club Communique crunched some numbers and found that over the last 10 years, the biotech sector fell 1.84% in the month following the ASCO Conference, but three months out the industry had risen 4.95%. Over six months following the conference, the industry was up 8.1% on average.
For a diversified approach to investing in the biotech sector, Lichtenfeld suggests the iShares Nasdaq Biotechnology ETF (IBB) for its liquidity. But he also warns that it is a bit "top heavy," with the top 10 holdings making up 46% of the portfolio. His three favorite names in the ETF are Teva Pharmaceutical
According to a report from Motley Fool, "the hard crash after ASCO often results from investors selling the news, rather than any data that lowers a drug's approvability or sales potential." In the report they list the price changes on June 6 (during this year's ASCO Conference) for companies that had presented data. Below we present up-to-date data on these companies' performance, as well as the companies favored by Lichtenfeld.
Do you think these names are possible bargains? Use this list as a starting-off point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)
1. Teva Pharmaceutical: Drug Manufacturers Industry. Market cap of $44.51B. Performance over the last month at 1.02%. The stock has lost 10.85% over the last year.
2. Vertex Pharmaceuticals: Drug Manufacturers Industry. Market cap of $10.34B. Performance over the last month at 11.16%. The stock has had a good month, gaining 11.16%.
3. Biogen Idec: Biotechnology Industry. Market cap of $25.22B. Performance over the last month at 5.85%. The stock has gained 89.87% over the last year.
5. Cyclacel Pharmaceuticals
9. Nektar Therapeutics
10. OncoGenex Pharmaceuticals
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. Data sourced from Finviz.