Biotechs still sliding, but Wall Street says don’t hit panic button just yet
By Russ Britt (MarketWatch)
Biotechnology stocks were falling after the lunch hour Wednesday and were in danger of sliding even further into a long-term selloff, but Wall Street analysts still say it’s no time to hit the panic button.
The Nasdaq Biotechnology Index was off more than 1%, and individual equities collectively comprised a sea of red in afternoon deals.
All the major biotech exchange-traded funds were falling again as investors pulled back from the sector, which has enjoyed a hot streak over the last few years. Leading the downward charge was the SPDR S&P Biotech ETF, which was off nearly 3%.
It didn’t help matters much that Exelixis Inc. lost more than a third of its value Wednesday after the company announced it would continue testing on its prostate cancer drug. That disappointed some analysts who hoped the drug trials could end early. Shares of Exelixis were down more than 37% in recent action to $4.04
The reaction to Exelixis’s news may have been overblown, but the pullback seems real at least for now. How long the pullback will continue is uncertain. Wall Street remains optimistic no crash is in sight.
Wells Fargo analyst Brian Abrahams said in a note to clients that the sector could be reaching a support level among investors.
“Optimism remains for sector performance through the end of 2014, we believe, reflecting appropriate value of the strong fundamentals and growth within the group which should start to come through as the dust settles,” Abrahams said. He later added: “Sentiment seems to be that additional correction for the sector may be likely, but that we may not have much further to go.”