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Should You Buy Beaten-Down Biotech Stocks & ETFs?

·2 min read

After a brutal first-half, stocks have rebounded slightly this month as some investors believe that the sell-off could be reaching a bottom.

Per FT, hedge funds have started buying beaten-down biotech stocks, since they believe that ultra-cheap valuations could revive M&A activity in the space. Many big pharma companies are looking to boost their drug pipelines through acquisitions.

Biotech stocks were huge beneficiaries of the pandemic as many of these companies were developing new vaccines and treatments for Covid-19, leading to a surge in IPOs and venture capital investments.

After a brutal sell-off over the past year, some publicly traded biotech stocks have fallen so much that their market value is now below the amount of cash they have in the bank, per WSJ. M&A activity in the sector during the first half was at its lowest level in more than a decade.

The iShares Biotechnology ETF IBB, the most popular product in the space, is market cap weighted. Amgen AMGN, Vertex Pharmaceuticals VRTX and Gilead Sciences GILD are its top holdings.

The Invesco Nasdaq Biotechnology ETF IBBQ tracks an index quite similar to IBB’s. It is much cheaper with an expense ratio of just 0.19%.

The SPDR S&P Biotech ETF XBI tracks an equal weighted index and is tilted towards smaller companies.

The ARK Genomic Revolution ETF ARKG is actively managed. Teladoc Health TDOC and CRISPR Therapeutics CRSP are among its top holdings.

Please watch the short video above to lean more.


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Amgen Inc. (AMGN) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
 
iShares Biotechnology ETF (IBB): ETF Research Reports
 
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
 
SPDR S&P Biotech ETF (XBI): ETF Research Reports
 
CRISPR Therapeutics AG (CRSP) : Free Stock Analysis Report
 
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
 
Invesco Nasdaq Biotechnology ETF (IBBQ): ETF Research Reports
 
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Zacks Investment Research