lundi 9 novembre 2020

Big emotions with big pharmas

Big pharmas are tough stocks to understand. One day, they're up a lot, the next day, they may be down like  if the company's going bankrupt. But no, the company won't go bankrupt. It's only some patent question or some good or bad news about a potential new drug. 

For instance, let's take a look at Biogen (BIIB). Last week, the stock was up 46% on a single day (from 246$ to 360$) on optimistic news about some Alzheimer treatment. Today, the stock is down 30% because the drug may not be that effective. It's not the first time I've seen that, for a pharma stock. It's a frequent thing. 

Today, Pfizer (PFE) announces a vaccine that would be effective by 90%. So, when the market opened, the stock was up 8%. It's not amazing but it's a good performance for such a giga cap (220B$ market cap). However, over the last 5 years, PFE is up by only 20% (including today's performance which helped a lot). And 20 years ago, the stock was more expensive than today. 

Of course, there are plenty of exceptions to these two examples. But I've had my share of pharma stocks in the past and I think that this industry is a bit too hard. And while pharmas are way easier than financials to understand and analyze, I'm not sure that, on the ethical level, they're much better. 

Maybe that Pfizer will do well with their vaccine. Actually, I think chances are high that Pfizer will go up substantially from here, because their announcment about a 90% effectivness sets the bar high and the company will be badly punished if the bar that they set themselves is not reached. In other words, it would be very stupid for them to prepare their own fall. But, who knows, the stock market is full of bad companies and stupid managers. 

5 commentaires:

  1. Rather than focus on 'big pharma', a good alternative space is 'medical devices'

    Now I'm at the time of my life where I have to focus more on dividend growth stocks so this is a space where I can't really participate in (another reason is that I'm almost always fully invested)...
    Anyway two good ideas to consider may be...

    Edwards Lifesciences...EW on the NYSE

    Spun off from Baxter International in 2000, Edwards Lifesciences designs, manufactures, and markets a range of medical devices and equipment for advanced stages of structural heart disease. Its key products include surgical tissue heart valves, transcatheter valve technologies, surgical clips, catheters and retractors, and monitoring systems used to measure a patient's heart function during surgery. The firm derives about 55% of its total sales from outside the U.S.

    Intuitive Surgical...ISRG on the Nasdaq

    Intuitive Surgical develops, produces, and markets a robotic system for assisting minimally invasive surgery. It also provides the instrumentation, disposable accessories, and warranty services for the system. The company has placed more than 5,500 da Vinci systems in hospitals worldwide, with 3,500 installations in the United States and a growing number in emerging markets

    Now both stocks are fully valued especially ISRG so now might not be the time to buy them but in may be worth your while to keep tabs on them in the coming year...

    The longer I invest in the stock market the more i appreciate the stimulating intellectual exercise it is.

  2. Actually EW is the one I really like as well, just have a feeling about it...someday I may own it...

  3. Looking forward to your "ce que les meilleurs achètent" update. :)

  4. EW is great. I own Stryker for medical devices SYK