Last Week's Biotech Tailspin Sends Stocks Plummeting
(Continued from Prior Part)
BioMarin Pharmaceutical falls 16.81%
BioMarin Pharmaceutical (BMRN) is one of the top biotech stock with a market cap of ~$16 billion. BMRN fell 16.81% last week and closed at $108.69. That’s below the 20-day, 50-day, and 100-day moving averages.
The 14-day RSI (Relative Strength Index) stood at 28, which indicates the stock has moved into oversold territory. However, BMRN recently announced that it has settled the patent challenge over Kuvan.
According to a September 18, 2015, Bloomberg report, BioMarin “announced that it has entered into a settlement agreement with Dr. Reddy’s Laboratories, Inc. that resolves patent litigation in the United States (U.S.) related to BioMarin’s Kuvan (sapropterin dihydrochloride) 100mg oral tablets.”
BMRN has a weight of 1.11% in the SPDR S&P Biotech ETF (XBI) portfolio.
The above graph reflects the performance of BMRN with respect to Incyte (INCY) and Vertex Pharmaceuticals (VRTX). BMRN is more volatile compared to INCY and VRTX.
BMRN’s best performance came in March 2015 with a return of 16.47%. Its worst performance is in September 2015, through September 28, with a return of -21.17%. BMRN year-to-date returns stand at 9.93% compared to INCY’s 30.16% and VRTX’s -17.09%.
BioMarin’s valuations
BioMarin Pharmaceutical (BMRN) closed at $108.69 on September 25, 2015. Considering the closing price of $108.69, BMRN’s PB (price-to-book) value stood at 7.42x compared to 13.17x for the biotechnology industry. This indicates the stock might be currently underperforming and trading below the industry standards. BMRN’s PB was 8.64x as of September 4, 2015, and has dropped drastically to current levels due to the fall in prices.
Investors can indirectly invest in biotech stocks through XBI, which holds stocks such as Amgen (AMGN) and Gilead Sciences (GILD).
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