The S&P 500 Biotechnology stock price index (ALXN AMGN BIIB CELG GILD REGN VRTX) peaked at a record high on February 24. It is down 10.5% since then through yesterday’s close. It is still up 208% from its 2011 trough, when the forward P/E fell to 10. This valuation multiple is now 22.0.
Driving valuations higher in the industry since mid-2011 has been an amazing increase in industry analysts' expectations for short-term and long-term earnings growth. The former has tripled to over 30%, while the latter has doubled to almost 25%. The recent correction in Biotechs was triggered by concerns that the government will pressure the industry to reduce the prices of some of its higher-priced products.
Today's Morning Briefing: Internal Correction. (1) S&P 500 remains at record high despite everything. (2) FSMI rebounding. (3) Priciest industries a bit less so. (4) A good excuse for taking some profits out of Biotech. (5) Internet Retailing is full of hot air. (6) Internet Software is cheaper, but not cheap. (7) Is there a shortage of growth stocks? (8) Growth stocks tend to attract attention and well-financed competitive startups. (9) Internal corrections broaden the bull market. (10) Financials may be too cheap now that they are so regulated. (11) The parable of Alibaba and Tencent. (More for subscribers.)
Driving valuations higher in the industry since mid-2011 has been an amazing increase in industry analysts' expectations for short-term and long-term earnings growth. The former has tripled to over 30%, while the latter has doubled to almost 25%. The recent correction in Biotechs was triggered by concerns that the government will pressure the industry to reduce the prices of some of its higher-priced products.
Today's Morning Briefing: Internal Correction. (1) S&P 500 remains at record high despite everything. (2) FSMI rebounding. (3) Priciest industries a bit less so. (4) A good excuse for taking some profits out of Biotech. (5) Internet Retailing is full of hot air. (6) Internet Software is cheaper, but not cheap. (7) Is there a shortage of growth stocks? (8) Growth stocks tend to attract attention and well-financed competitive startups. (9) Internal corrections broaden the bull market. (10) Financials may be too cheap now that they are so regulated. (11) The parable of Alibaba and Tencent. (More for subscribers.)
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