Investors looking for a safe harbor for their money in these uncertain pandemic times may do well to consider biotech stocks. Note that the usually reliable S&P 500 Index declined by 26.7% so far in 2020. By comparison, biotech stocks were off 15.6%. Normally, basing a safe investment on a lesser rate of decline is not the optimum indicator for judging an investment — but these are not normal times.
While it’s true that biotech stocks have suffered declines, there is every reason to believe they will rebound strongly in the coming months. Furthermore, buying biotech now means you’ll be getting in for less cost. When the markets come back, the potential for profits is considerable.
The outbreak of COVID-19 has meant disastrous stock performance in the retail and most other sectors. It’s unlikely to turn around soon. Experts say biotech stocks are well-positioned for an opposite trajectory. Bank of America analyst Geoff Meacham said pandemic dampening of biotech companies would be limited. He said the future necessity of these products makes them an excellent bet for a turnaround in 2021.
Keep in mind that while the overall decline in biotech has been more than 15%, there are plenty of examples of individual companies that have posted healthy gains. One example is Regeneron Pharmaceuticals. This firm has a three-decade track record of developing new treatments for an array of diseases. It helped that Regeneron developed its REGN-COV2 “cocktail” of drugs that have shown promise for treating COVID-19. It’s one of the experimental drugs given to President Donald Trump after he contracted coronavirus. It seems almost needless to say that the President’s swift recovery and subsequent praise of Regeneron bolstered its profile and lifted the value of its stock.
Another example is Exelixis. This company works with genomic sequencing techniques to develop cancer-fighting drugs. Its top products are Cometriq and Cobometyx. These drugs are considered top treatments for a variety of cancers, including thyroid cancer. With these are other promising treatments in the pipeline, Exelixis is well-positioned for continued growth. It also enjoys a highly favorable cash-on-hand versus debt status.
Thus, biotech firms, in general, have shown resilience in fending off the declines afflicting just about every other sector, while selected firms have bucked the trend to turn in positive growth.