The sell-off in high-growth companies -- especially in tech and biotech names -- continued to snowball on Friday. What began last month with a single letter from three congressmen questioning the pricing of Gilead Sciences' Sovaldi has turned into a legitimate sell-off. Biogen Idec (NASDAQ:BIIB), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), and Broadcom Corp. (UNKNOWN:BRCM.DL) each ended in the dredges of the stock market today. The S&P 500 Index (SNPINDEX:^GSPC) lost 17 points, or 1%, to end at 1,815.
Biogen Idec, a biotechnology company that offers treatments for ailments from hemophilia to MS, lost 4.7% today. The stock ended as the worst performer in the entire S&P 500 Index, as indiscriminate selling among peers in the industry hit shares where it hurts. The biotechnology industry was down an astounding 7.7% in all today, so many of Biogen's smaller peers posted even steeper losses on Friday. Investors will get a better glimpse on April 23 of whether the recent slump in share prices was warranted or not, when Biogen reports its quarterly earnings.
Shares of Vertex Pharmaceuticals also lagged the market, plunging 4% in trading today. Vertex's business is essentially reliant upon two drugs: Kalydeco, which treats cystic fibrosis, and Incivek, which treats hepatitis C. Kalydeco is seen as the growth engine of the future, as Incivek's sales have wound down from a blistering pace of $450 million a quarter in 2011 to $86 million a quarter and declining in recent periods. Consider the fact that the biotech space is in a freefall right now, and it's no wonder Vertex shares are reeling.
Lastly, Broadcom Corp. finished as a major underperformer, losing 3.3% in trade. The company is already going through an adjustment period, as the cooling of the smartphone market has kept the share price of the chipmaker in check. With a P/E of 40, the dreaded label of being a technology company in a sector-specific sell-off, and recent downgrades by research outfits, Broadcom doesn't seem to have much going for it. Personally, while I do think the recent marketwide pullback is a healthy reality check, I don't think Wall Street's giving Broadcom a fair shake, and pessimism surrounding the company provides a good entry point for long-term investors.