While U.S. equities continue their sideways skid just below the Dow 20,000 threshold — a level that has provided intractable for the last five weeks — buyers aren’t sitting still. Since the New Year, vigorous new interest has been seen in biotech stocks as hopes build for president-elect Donald Trump’s plans to repeal and replace Obamacare, potentially improving both cost and coverage.
If successful, that will mean millions of new patients paying for drug treatments and medical devices — just the thing to boost profits in the medical sector.
As a result, the iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB) is up more than 8% from its late December low and is moving in on its mid-November highs. The IBB has been in a year-long funk after peaking in the summer of 2015.
For those looking to play along, here are five biotech stocks that are heating up:
Biotech Stocks Catching Fire: Valeant Pharmaceuticals (VRX)
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares are testing above their 50-day moving average for the first time since September, potentially marking the end of a six-month downtrend.
The Canadian-based drugmaker is on the move after announcing two divestures to repay its senior credit facility and provided Phase 3 study results for its psoriasis treatment IDP-118. The sale includes its remaining equity stake in Dendreon Pharmaceuticals.
Valeant will next report results on March 13 before the bell. Analysts are looking for earnings of $1.21 per share on revenues of $2.34 billion.
Biotech Stocks Catching Fire: EnteroMedics (ETRM)
EnteroMedics Inc (NASDAQ:ETRM) has exploded higher, posting a whopping trough-to-peak gain of more than 16-fold, to return to levels not seen since last summer. The medical device maker develops neuroblocking devices used to treat obesity and metabolic diseases by controlling hunger sensations.
Shares are lifting on optimism about the retirement of all senior convertible notes and the placement of two of its devices at vBloc Institutes.
Biotech Stocks Catching Fire: Sarepta Therapeutics (SRPT)
Sarepta Therapeutics Inc (NASDAQ:SRPT) shares are surging up and over their 50-day moving average, a gain of nearly 23% that takes SRPT back to levels not seen since November. The company, which develops RNA-based treatments for diseases including muscular dystrophy, is being bolstered by a positive note from Baird analysts on Tuesday reiterating a $102 price target.
Sarepta will next report results on Feb. 23 after the close. Analysts are looking for a loss of $1.10 per share on revenues of $5.6 million.
Biotech Stocks Catching Fire: Abbott Laboratories (ABT)
Abbott Laboratories (NYSE:ABT) — which develops a variety of pharmaceutical treatments, devices and vision care products — is up more than 9% from its December lows to return to levels not seen since October.
The company has benefited from broad buying interest in biotech stocks — thanks to its position as one of the larger companies in the sector — and the recent closing of its acquisition of St. Jude Medical.
ABT will next report results on Jan. 25 before the bell. Analysts are looking for earnings of 65 cents per share on revenues of $5.4 billion.
Biotech Stocks Catching Fire: Illumina (ILMN)
Illumina, Inc. (NASDAQ:ILMN) shares are surging nearly 17% on Tuesday, filling the gap from the October selloff, after the company announced the introduction of a new genome sequencing architecture expected to dramatically lower the cost of processing.
Shares are also enjoying a boost form an upgrade by analysts at Bank of America Merrill Lynch and comments by executives at a JPMorgan conference Monday night that Q4 revenues should be above consensus.
The company will next report results on Jan. 31 after the bell. Analysts are looking for earnings of 81 cents per share on revenues of $611 million.