Big-Cap Biotech Stocks Plumb Lowest Valuations in 10 Years# Stock
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Biotech stocks have been pummeled in recent months, but get this: the most
mature companies in the industry: Gilead Sciences (GILD), Amgen (AMGN),
Celgene (CELG) and Biogen (BIIB) are trading at their lowest collective
valuation in a decade.
That’s according to Mark Schoenebaum, biotech analyst at Evercore ISI. He
blasted a valuation chart to clients on Thursday, which shows a rarity: big-
cap biotech stocks have a lower price-to-earnings ratio, based on estimates
for the next 12 months, than the S&P 500. That’s almost never happened
since 2006. Barron’s Johanna Bennett argued yesterday that Biogen was
looking cheap relative to its earnings potential.
The iShares Nasdaq Biotechnology exchange-traded fund(IBB) is market-cap
weighted, and therefore heavy on the big boys. The SPDR S&P Biotech ETF (XBI
), on the other hand, gives equal weight to large and small caps alike. It’
s fallen nearly 30% so far this month alone -- about seven percentage points
more that the market-cap weighted ETF.
mature companies in the industry: Gilead Sciences (GILD), Amgen (AMGN),
Celgene (CELG) and Biogen (BIIB) are trading at their lowest collective
valuation in a decade.
That’s according to Mark Schoenebaum, biotech analyst at Evercore ISI. He
blasted a valuation chart to clients on Thursday, which shows a rarity: big-
cap biotech stocks have a lower price-to-earnings ratio, based on estimates
for the next 12 months, than the S&P 500. That’s almost never happened
since 2006. Barron’s Johanna Bennett argued yesterday that Biogen was
looking cheap relative to its earnings potential.
The iShares Nasdaq Biotechnology exchange-traded fund(IBB) is market-cap
weighted, and therefore heavy on the big boys. The SPDR S&P Biotech ETF (XBI
), on the other hand, gives equal weight to large and small caps alike. It’
s fallen nearly 30% so far this month alone -- about seven percentage points
more that the market-cap weighted ETF.
