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IBD’s Biotech Group Tested As Biotech, Amgen, Gilead, Vertex, Celgene Earnings Loom | Stock News & Stock Market Analysis

Futures for the S&P 500 index, Nasdaq 100 and Dow industrials were little changed late Monday after the major averages closed near session lows. The top-rated Medical-Biomed/Biotech group fell once again while several leading biotechs tested key levels as Biogen (BIIB), Amgen (AMGN), Gilead Sciences (GILD), Celgene (CELG), Vertex Pharmaceuticals (VRTX) and Alexion Pharmaceuticals (ALXN) are all on tap with earnings this week.

XAutoplay: On | OffThe Nasdaq composite led Monday’s retreat, losing 0.6%, while the S&P 500 index fell 0.4% and Dow industrials 0.2%. The Medical-Biomed/Biotech group fell 1.1%, its ninth straight decline after hitting a 22-month high on Oct. 11. Even so, it’s still rated No. 1 out of the 197 industries that IBD tracks.

Biogen reports earnings Tuesday morning. Amgen and Vertex follow on Wednesday, while Celgene, Alexion and Gilead Sciences report Thursday.

Biogen

Biogen earnings are expected to rise 10% to $5.70 a share as revenue grows 2.7% to $3.04 billion. Biogen is a leader in multiple sclerosis drugs and it has a new hit with Spinraza, the only spinal muscular atrophy drug on the market. But investors are also bullish on the prospects for aducanumab, which has indicated in early testing that it can reduce cognitive decline in early Alzheimer’s patients.

Biogen shares fell 2.8% to 328.55 in Monday’s stock market trading, their third straight decline, and closed just above the 5% buy zone from a 312.50 entry initially cleared at the end of August. The stock rose to above 330 in late trading after Guggenheim initiated the biotech with a buy rating and a 402 price target.


IBD’S TAKE: Buying or holding a stock can be risky heading into an earnings report. Here’s an earnings options strategy that can help you cash in on post-earnings stock gains, while minimizing the risk from a weak quarter.


Amgen, Vertex, Gilead

Amgen, Vertex and Gilead Sciences fell below their 50-day moving averages on Monday. Amgen closed below an old 182.70 buy point for the first time since its Sept. 11 breakout. Amgen, Vertex and Gilead are in new flat bases.

Vertex busted out in July on promising data on a new cystic fibrosis drug. Gilead Sciences is best known for its HIV/AIDS and hepatitis C drugs, but last week won FDA approval for its CAR-T drug to treat an aggressive form of non-Hodgkin lymphoma. The drug, Yescarta, comes from Gilead’s recent acquisition of Kite Pharma.

Gilead earnings are expected to fall 24% to $2.08, as hepatitis C drug sales tumble. Amgen EPS is seen up 2% to $3.09. Vertex earnings are expected to go vertical, surging 131% to 37 cents.

Celgene

Celgene shares rose 0.9% on Monday, but that’s after tumbling 10.8% on Friday. Celgene scrapped late-stage trials on a Crohn’s disease treatment. Wall Street forecasts a 19% EPS gain to $1.88.

Alexion

Alexion retreated 2.75% on Monday, undercutting the low of its short flat base. Alexion dropped below its 50-day moving average on Friday.

Alexion earnings are expected to rise 8% to $1.33.

Biotech ETF IBB

One popular way to avoid stock-specific risks in biotech is via ETFs. The iShares Nasdaq Biotech (IBB) fell 1.2% to 327.74, dropping below their 50-day moving average and a 330 buy point cleared at the end of August.

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