The S&P 500 and the NASDAQ ended the Friday trading session in the green, both nearly flat year-to-date, while the biotech sector continued sliding lower – iShares Nasdaq Biotechnology (IBB) ETF was up as much as 20% YTD at the end of February. Now, it’s nearly flat.
On Wednesday, we wrote about these market conditions and how technical analysis provides a relevant backdrop (we need something to look at besides that sea of red) in a tumultuous environment. So, what should you be doing on a heady pullback?
Know what you own, why you own it (this is a great time to revisit your investment thesis), and have a list of names that you find attractive, with cash to deploy as compelling opportunities materialize and support steps in. As the sector remains choppy, it’s securities with near-term catalysts that will garner real investor attention.
Although PropThink’s Premium readers can find a deeper list of our interests at PropThink.com, one name that sticks out as things roll lower (and on which we’ve opined extensively) is Synergy Pharmaceuticals (SGYP). Synergy is a pure-play GI company. The stock was brutalized this week, down nearly 25% in 5 trading sessions, despite a phase 2 trial read-out just a month away. You can read more about SGYP, and why we think it’s on sale, in PropThink’s previous coverage here. For those new to the story, it’s a good time to understand the thesis.
In addition, catch up on why we believe Emergent Biosolutions (EBS) remains a compelling long-term holding. The company’s revenue-generating biodefense portfolio and near-term moving average support should provide investors a safe haven as the top-down biotech story plays out.
Next week will be interesting. Some analysts are attributing the continued weakness to late-quarter profit-taking (remember, the IBB is up 250% in the last few years). If that’s the case, early April will be indicative.
You can unlock all of our latest research with a subscription to PropThink Premium. Things are getting cheaper, and getting your shopping list ready now is the prudent thing to do. We’re in no rush to start buying, and you shouldn’t be either, but preparation is key.
