The entire biotech sector has been out of favour and subject to shorting since the US elections last November and also since Covid on a larger time frame. Below is a chart of the XBI against the S&P 500 (red line) and our All Ordinaries (purple line) since November - the underperformance is startling.
In particular, while the major indices have recovered to near all time highs, the XBI is still lower than it was 10 years ago.
The most recent bout of weakness has been brought about by uncertainty surrounding Trump and his mate RFKlown's healthcare policies (including drug pricing) and funding cuts and "reorienting" of agencies such as FDA, CDC, NIH, etc.
The sector will turn at some point, as all do, once these uncertainties are resolved and NEU will be re-rated to reflect its fundamental strength. I expect at some point once interest rates begin to fall sustainably and the environment becomes more certain there will be a significant uptick in M&A activity as there is deep value to be had. This will likely be a catalyst for the sector.
Until then, try not to worry about the short term SP shenanigans and stay focussed on the fundamental value in your company.
NEU Price at posting:
$13.10 Sentiment: Buy Disclosure: Held
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