3 Pharmaceutical Stocks Ready to Explode to New Highs

Three (3) pharmaceutical stocks on our radar moved higher on Monday, as stocks in the healthcare, consumer staples, and utility sectors surge higher. Institutions are accumulating shares in defensive stocks as the indices consolidate recent gains.

• Pharmaceutical stocks are moving higher as a group. ABBV, BMY, GILD, MRK broke out.
• Merck (MRK) is moving forward in its purhase of Imago BioSciences (IMGO).
• Consumer staples stocks are showing strength. PG, CLX, KMB, HSY were higher today.
• Utility stocks are taking a cue from the winter freeze.

We’ve been active buyers of AbbVie (ABBV), Bristol Myers Squibb (BMY), and Merck (MRK) over the past couple of weeks despite market gyrations. All three are moving higher, together with the healthcare sector (XLV).

Pharmaceutical Stocks Rally

Merck’s RS Line rose to a new high of 95. Accumulation distribution at “A” suggests institutions are building position shares, while earnings rise. In addition, the acquisition of Imago BioSciences (IMGO) will be accretive to Merck earnings going forward.

Bristol Myers Squibb (BMY) rose from the 21d exponential moving average on Thursday after comments from the CEO voiced reassurance that its pipeline of drugs were safe from the Inflation Reduction Act (IRA).

RS Line rose to 92. Earnings are intact. 

Bristol Myers Squibb (BMY) management voiced “concerns over U.S. drug pricing reforms, further suggesting these changes will force the company to cancel some drug development programs,” specifically in oncology. – CEO Giovanni Caforio.

That said, the company is “well positioned, with a strong pipeline and new drugs that will not be subject to pricing review for many years”, the CEO said.

AbbVie (ABBV) rose 1.37% during the regular session, adding 0.69% after hours, as its partner, Danish biotech Genmab (GMAB) announced Monday that the FDA accepted its marketing application and granted priority review for lymphoma therapy.

Something to keep in mind when trading these and other pharmaceutical stocks.

• In 2020 – Berkshire bought, then quickly sold Pfizer (PFE).
• In 2021 – Berkshire Hathaway dumped positions in Biogen (BIIB), Merck (MRK), Teva Pharmaceuticals (TEVA) and spinoff Organon (OGN).
• In 2022 – Berkshire closed positions in AbbVie (ABBV), Bristol Myers Squibb (BMY) and Royalty Pharma (RPRX), not long after buying them.

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Happy Trading, 

Vinny

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