Throughout the market melt-up out of the 2011 lows to last summer’s peak, biotechnology and pharmaceutical stocks led the way higher thanks to momentum inflows, revenue hopes predicated on aging baby boomers and classic performance chasing.
The iShares Nasdaq Biotechnology Index (ETF) (IBB) roughly quadrupled over this period, peaking at $400.75 before sliding lower on political pushback against high drug prices, negative headline coverage and a newly risk averse investor class. Since then, the IBB has fallen 38% to return to mid-2014 levels.
While the broad market rallied nicely off of the January-February lows, led by energy and materials stocks, biotech and pharma just didn’t participate. Traders have since turned a cold shoulder to a sector group they once loved.
With stocks looking toppy and sellers coming back in, another bout of weakness looks set to hit. While you may not want to eliminate these industry stalwarts wholeheartedly, here are seven Big Pharma and biotech stocks to either take some profits on or consider as short-side plays.
Big Pharma & Biotech Stocks to Sell: Pfizer Inc. (PFE)
Large-cap drug maker Pfizer (PFE) tried and failed to retake its 50-day moving average during the market rebound of the last two months.
A test of the February low near $28.50 looks likely now, as the downtrend that started last summer rolls on. Recent negative headlines included word the company’s Corex cough syrup brand was banned for sale in India.
Pfizer reports results next on April 26 before the bell. Analysts are looking for earnings of 54 cents per share on revenues of $11.9 million.
Big Pharma & Biotech Stocks to Sell: Celgene Corporation (CELG)
Celgene (CELG), maker of drugs used to treat cancer and other inflammatory diseases, is seeing its shares roll over again in a continuation of the downtrend that started last summer.
A break of the January-February low near $95 — which was also the “flash crash” low set last August — would set up a return to 2014 levels.
The company reports results next on April 21 before the bell. Analysts are looking for earnings of $1.12 per share on revenues of $712 million.
Big Pharma & Biotech Stocks to Sell: Eli Lilly and Co (LLY)
Eli Lilly (LLY) shares have settled back to its February low continuing the downtrend started last September.
A break below the $70-a-share level would return the stock to its early 2015 trading range for a loss of nearly 25% from its high.
LLY next reports results on April 26 before the bell. Analysts are looking for earnings of 83 cents per share on revenues of $4.8 billion.
Big Pharma & Biotech Stocks to Sell: Shire PLC (ADR) (SHPG)
Shire (SHPG), which focuses on drugs for the treatment of ADHD and binge eating, among others maladies, saw shares double-top near $260-$270 in 2014 and 2015 before rolling over last August.
Since then, SHPG shares have lost more than 40% on competitive worries surrounding the acquisition of Baxalta.
The company steps into the earnings confessional April 29 before the bell, with analysts expecting earnings of $1.01 per share on revenues of $1.7 billion.
Big Pharma & Biotech Stocks to Sell: Biogen Inc (BIIB)
Biogen (BIIB), which develops drugs to treat a variety of neurological, blood and autoimmune disorders, has seen its shares in the doghouse since last summer centered on the $290-a-share level.
But now, BIIB stock is drifting to the lower end of that consolidation range, setting up a break of support at $240. That puts the 2013 levels back in play.
Biogen releases results on April 22 before the bell, where it will attempt to see Wall Street’s earnings consensus of $4.46 per share on revenues of $2.75 billion.
Big Pharma & Biotech Stocks to Sell: Alexion Pharmaceuticals, Inc. (ALXN)
Alexion (ALXN), known for its development of Soliris used to treat rare blood disorders, is on the slide and at risk of breaking below its February low to return to levels not seen since 2013.
ALXN shares have lost more than 37% from its high last summer.
Alexion report earnings results next on April 21 before the bell. Analysts are looking for earnings of $1.12 per share on revenues of $712 million.
Big Pharma & Biotech Stocks to Sell: Mallinckrodt PLC (MNK)
This comes in the wake of some better-than-expected results on Feb. 2, in which the company reported earnings of $2.09 per share (31 cents ahead of estimates) on a 19.1% jump in revenues to $915 million.
MNK will report results next on May 5 before the bell. Analysts are looking for earnings of $1.74 per share on revenues of $874 million. Shares are at risk of breaking below two-year-support near $50 — setting up a return to levels not seen since 2013.