U.S. equities are rebounding from Wednesday’s weakness with a tepid rally on Thursday that suggests the bulls aren’t fully confident in their abilities to sustain the historic post-August uptrend. The catalyst for the rebound was a “dovish taper” decision by the European Central Bank, which promised to extend their bond buying program into 2018, albeit at a diminished rate.
But headwinds remain. President Trump has a big decision to make, on the verge of nominating a new Federal Reserve chairman. And his tax reform plans face an uncertain future in the Congress. Moreover, a persistent rise in interest rates (as Treasury bonds weaken) is putting the hurt on “risk parity” funds once again.
And a number of technical indicators are weakening or flashing warning signals, from breadth to fund positioning and investor sentiment. Large-cap “FANG” tech stocks remain weak, as are biotech stocks, one of the market’s recent areas of momentum interest.
Here are five biotech stocks that are breaking down badly:
Biotech Stocks Getting Battered: Celgene (CELG)
Celgene Corporation (NASDAQ:CELG) shares are getting wrecked down nearly 20% in mid-day trading after reporting weaker-than-expected quarterly results. Forward sales guidance was cut as well. Earnings grew 21% to $1.91-per-share, above estimates. But net product sales grew just 11% to $3.3 billion, about 4% below what the Street was expecting.
CELG investors were massively disappointed by the lowering of 2020 revenue guidance to $19-$20 billion from $21 billion previously, fueling concerns about the coming “patent cliff” for its Revlimid treatment. The disappointment resulted in a downgrade from analysts at Wells Fargo.
Biotech Stocks Getting Battered: Gilead Sciences (GILD)
Gilead Sciences, Inc. (NASDAQ:GILD) shares are down nearly 3% in trading, falling further away from their 50-day moving average and looking set for a return to the August consolidation range, which would be an 8% decline from here. Management recently presented positive results from the Phase 2 and Phase 3 studies of new drugs designed to treat liver aliments.
GILD will report earnings after the close today. Analysts are looking for earnings of $2.13-per-share on revenues of $6.4 billion. When the company last reported on July 26, earnings of $2.56-per-share beat estimates by 39 cents on a 8.2% decline in revenues.
Biotech Stocks Getting Battered: Biogen (BIIB)
Biogen Inc (NASDAQ:BIIB) shares, which have already gapped down 13% from their recent highs, look set to decline below their late September lows in a possible prelude to a drop to its August lows, which would be worth another 8% decline from here. Analysts at RBC Capital Markets recently lowered their price target in the wake of a mixed quarterly performance.
BIIB will next report results on Jan. 25 before the bell. Analysts are looking for earnings of $5.61-per-share on revenues of $3.1 billion. When the company last reported on Oct. 24, earnings of $6.31-per-share beat estimates by 58 cents on a 4.1% rise in revenues.
Biotech Stocks Getting Battered: Alexion Pharmaceuticals (ALXN)
Despite reporting better-than-expected results before the open, Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) shares are dropping another 3% in mid-day trading on Thursday, threatening a decline below their 200-day moving average for the first time since early July. This partially reversed the 50% rise off of the late May low. Watch for a possible fill of the June gap move near $110, which would be worth a 13% decline from here.
ALXN reported earnings of $1.44-per-share — 12 cents ahead of estimates — on a 7.5% rise in revenues from last year. Management also raised forward guidance. The results clearly weren’t good enough, unable to meet the “whisper” number on the Street.
Biotech Stocks Getting Battered: Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) shares are down more than 3% in trading on Thursday, falling unceremoniously out of a multi-month consolidation range and filling the gap from its post-earnings gap move in July.
With the stock up some 70% from its springtime lows, this is the first significant pullback for the stock.
The move comes after VRTX reported better-than-expected results on Wednesday, with earnings of 53-cents-per-share beating estimates by 16 cents on a near 40% rise in revenues. Forward guidance was raised as well. VRTX will next report results on Jan. 24 after the close.