Issue #15: Healthcare Earnings, Cardinal Health/Becton Dickinson Acquisitions and Clinical Trial Updates

INO Health & Biotech Stock Guide

Issue #15


Healthcare sector earnings are underway and thus far overall earnings have been robust overall with pockets of softness. From the health insurer side, UnitedHealth (UNH) beat on both EPS and revenue with revenue coming in at a 9.4% year-over-year growth. From the pharmaceutical supply chain, Cardinal Health (CAH) beat on EPS, missed on revenue and disappointed investors when they offered a softer outlook for fiscal 2017 and 2018. This set off a sell-off in the pharmaceutical supply chain stocks. In the biotech space, AbbVie (ABBV) beat on both EPS and revenue with revenue coming in at 9.7% year-over-year growth, Celgene (CELG) beat on EPS and missed on revenue, however revenue came in at a 17.9% increase year-over-year, Regeneron (REGN) missed on EPS, but beat on revenue with a 10% year-over-year growth, Amgen (AMGN) beat on EPS however missed on revenue with a year-over-year decline of 1.3%. In the pharmacy and PBM side, CVS Health (CVS) beat on both EPS and revenue with a 3.0% year-over-year increase and Walgreens (WBA) met EPS and missed on revenue with a year-over-year decline of 2.4%. As Q1 comes to a close, it appears the healthcare cohort has some softness in the pharmacy and pharmaceutical supply chain spaces however biotech and health insurers have posted robust revenue growth.

Continue reading "Issue #15: Healthcare Earnings, Cardinal Health/Becton Dickinson Acquisitions and Clinical Trial Updates"

The Political Biotech Charade

Noah Kiedrowski - Contributor - Biotech

Hillary Clinton is once again going after the pharmaceutical companies in the form of drug pricing attacks. Her latest attack was on Mylan and its aggressive 400 percent price increase over the past decade for its EpiPen drug which uses an auto-injection of epinephrine to treat severe allergic reactions. Mylan acquired the product in 2007, and the price increased from $100 in 2008 to its current cost of ~$600. Hillary Clinton was quoted as stating:

"That's outrageous — and it's just the latest troubling example of a company taking advantage of its consumers," and "It's wrong when drug companies put profits ahead of patients, raising prices without justifying the value behind them."

Even more, after her initial Tweet the iShares Nasdaq Biotechnology ETF (PACF:IBB) sold off ~5% within minutes and moved from $299 to $279 per share by the next day or 6.7% over a two day period (Figures 1 and 2).

Hillary Clinton EpiPen Tweet
Figure 1 – Hillary Clinton’s remarks pertaining to the EpiPen price increase

Correlation between Hillary Clinton’s tweet and the subsequent sell-off of the biotech cohort
Figure 2 – Correlation between Hillary Clinton’s tweet and the subsequent sell-off of the biotech cohort

Former Vermont governor Howard Dean also came out swinging against the pharmaceutical and health-care industry stating that reform is needed which necessitates "far more sweeping" than what Dodd-Frank did for the financial industry. He further went on to state: Continue reading "The Political Biotech Charade"

Fibonacci Analysis of Two Option Setups

We break down our two favorite option trades in the market currently using Fibonacci analysis. Biotech is leading the charge lower, while this precious metal could be about to lift off.

Learn more about here.

Plan Your Trade, and Trade Your Plan,
Todd Gordon

Political Posturing Continues To Pummel Biotech

Noah Kiedrowski - Contributor - Biotech

As the political cycle matures in 2016, the political posturing continues to plague the entire healthcare cohort. Utilizing the biotech sector and drug pricing as a scapegoat for political gains has translated into the sector posting sharp declines over the past year. Using the iShares Biotechnology Index ETF (PACF:IBB) as a proxy for the biotechnology sector, this cohort has fallen from $401 in July of 2015 to $240 in February of 2016 or alternatively a 40% decline. This sharp decline coincided with heated political rhetoric aimed at the collective cohort of healthcare and more specifically biotech-related companies. This cynical sentiment by political frontrunners was largely rooted in the pricing of drugs. It’s noteworthy to highlight that this specific segment of the industry (i.e. drugs) comprises less than 10% of the total cost of healthcare. As candidate threats via legislative action geared towards reining in the costs of drugs unfolded, these actions negatively reverberated through healthcare and biotech stocks alike. The political posturing surrounding potential plans to reign in drug costs are now largely priced into many stocks within the healthcare umbrella. I contend that after the roughly year-long political sell-off the biotech cohort looks attractive at these levels. Once the political cycle is complete later this year, these stocks will likely benefit from the mere absence of political headwinds. Taken together along with the difficulty of enacting any legislative action to regulate the industry this may represent a buying opportunity that’s been presented by extraneous political events. Continue reading "Political Posturing Continues To Pummel Biotech"