RBC's Yee Sees Interesting Buying Opportunities in Biotech Pullback (BIIB) (BMRN) (ESPR) (GILD)
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Last week was tough on biotech investors, with broad weakness in the space. The decline was similar to March's pullback, which was short-lived. In the view of analyst Michael J. Yee of RBC, investors are used to corrections, and the drop creates interesting buying opportunities.
Long ideas mentioned by Yee include Biogen (NASDAQ: BIIB), Vertex Pharma (NASDAQ: VRTX), BioMarin Pharma (NASDAQ: BMRN), Esperion Therapeutics (NASDAQ: ESPR), and Gilead Sciences (NASDAQ: GILD).
"We sense far less concern than in prior corrections probably because we're used to seeing these "corrections" more often, so people feel more able to buy these pullbacks since we've seen the bounces before," said Yee. "Some think it is healthy given these are accompanied by significant "run-ups" and perhaps over-zealous buying so it's understandable to have pullbacks ... nothing structural happened other than a "risk-off" week so we continue to march on fundamentals."
"Key in our view is that Q1 EPS was seasonally weak as we forecasted and investors knew this - we now get past that and see lots of interesting buying opportunities with the pullback," continued the analyst.
"Long ideas: 1) BIIB: we're fairly confident Alz drug is "active" and "working" so with 1350 pts x 2 studies x 18 mos duration in P3...it's well-powered for success, 6mg data should look OK and long-term upside is significant, 2) less binary would be VRTX as this seems to want to go higher on long-term thesis of $10 EPS power plus more potential upside on heteros, no great bear thesis right now... 3) buy BMRN for DMD approval this year, we like this pullback. 4) Buy ESPR for Q2 new data, FDA green-light by Aug...5) we think GILD should march to $110+ and CELG should reverse back up after 5/7 passes," added the analyst.
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