The Inflection Economy
Portfolio Managers at Logos LP
Biotech is drawing some of the largest long-term buying ever into the SPDR S&P Biotech ETF as it pushes toward its 2021 all-time high. Heavy buy volume, including another historic dollar-volume spike last week, matters more than short-term uncertainty, and the selling has been inefficient. If price loses $154.20 again, the bear case comes back into play. x.comÂ
Biotech looks like a sector that wants to trend higher. Biotech M&A drove a heavy-volume weekly move to the top of a multi-month range; it just needs some help from the macro environment. x.comÂ
Biotech looks weak as rates finally appear to be weighing on the sector. The biotech ETF closed red well below its 50-day moving average, its 100-day is below its 150-day, and the chart is messy. x.comÂ
Biotech stocks are breaking out of a five-year range because the threat from oil and interest rates was priced in years ago. Many of the most undervalued growth stocks are now in biotech, and research discovery is getting a boost from AI, making it perhaps the sector with most to gain from AI productivity. Charts support it: daily volume spikes have tended to mark major bottoms, the weekly held its quarterly averages to form a base, and the monthly shows a healthy pullback to the one-year EMA. … Show more
The year-end price target for biotech stocks is raised to $200 after a Bloomberg report that former FDA oncology chief Richard Pazdur is under consideration to return to the agency. x.comÂ
Biotech tools stocks such as Charles River and Illumina are in a narrative-driven mania while their fundamentals haven't really moved. Charles River is ripping after reaffirming guidance for negative revenue growth this year. Illumina hasn't grown in five years, yet trades at over 50x earnings and 35x EV/EBITDA, with merely fine margins. Five straight years of easier comparisons are being sold as a coiled spring. x.com x.com x.comÂ
Moderna, biotech stocks, AbbVie and Amgen have bullish chart setups. Their daily charts are in uptrends, with the latest strong bullish candles confirming momentum alongside steady, strong whale accumulation. x.comÂ
Small- and mid-cap biotech looks like one of healthcare's more asymmetric setups after a four-year bear market, as AI speeds drug discovery and Big Pharma faces a patent cliff. Over $300B of pharma revenue goes off patent in the next few years, M&A is already ramping hard as pharma hunts for assets, and many small and mid-cap names still trade at reasonable valuations, making them potential takeover targets. x.comÂ
Significant discounts to broader pharmaceutical industry valuations on projected 2031 earnings make some high-quality mid-cap biotech stocks attractive. Many have cleared Phase 3 trials or reached more advanced stages, and some may reach profitability without more capital, an advantage if financing tightens. Selling these stocks to chase speculative biotech or large pharma at historically elevated multiples makes little sense. x.comÂ
Biotech, including Thermo Fisher, Eli Lilly, Intellia, CRISPR, Illumina and NeoGenomics, stands to gain as AI-trade capital rotates out of infrastructure, since healthcare is the largest market AI has yet to disrupt. AI hardware is worth about $14 trillion versus $1.4 trillion for biotech, so a 2.5% rotation could, at 5x inelasticity, put $1.75 trillion of pressure on biotech. Capital isn't leaving the AI trade; the equal-weighted S&P 500 is at all-time highs. x.com x.comÂ