November 6, 2014
Biotech Watchlist Update: Small-Cap Biotechs Struggle to Rebound, but Investors Remain Enchanted by Big Pharma’s Solid Returns
When the biotechnology market hit a speed bump in early 2014, every stock in the sector was jolted. Large-cap biotech and big pharma have largely recovered, but small- and micro-cap companies haven’t yet entirely recouped the losses. The performance of Streetwise Reports’ Biotechnology Watchlist to date reflects this trend: The portfolio lingered in negative territory after the late-winter punch, and hovers near breakeven as of Nov. 3. To get a handle on the drivers of small-cap stock price volatility, The Life Sciences Report turned to a pair of the analysts who selected companies for the 2014 Watchlist, John McCamant of the Medical Technology Stock Letter and George Zavoico of MLV & Co. In this recap, the two experts offer updates on the companies they selected for the portfolio.
What’s Up with the Down?
The biotech indices all took a hit at the beginning of the year, but the major indices, such as the NASDAQ Biotechnology Index (IBB), which is up about 30% year-to-date, have since rallied. Small- and micro-cap companies, like those on the Watchlist, haven’t been so lucky. The Life Sciences Report asked McCamant for his thoughts on what might be behind the market volatility, and he sent along his reflections as noted in the September 2014 issue of his Medical Technology Stock Newsletter.
“Wide swings in biotech stocks are common,” McCamant wrote.