Here's Why These 3 Biotech Stocks Might Stop Rallying (Revised)
Zacks Investment Research | Sep 25, 2017 08:57AM ET
Biotech stocks have bounced back strongly this year after a poor show last year despite challenges like rising competition, slowdown in growth of mature products and generic competition for certain key drugs. Strong clinical results, faster FDA approvals, success of new products and significant contributions from established drugs have led to the rally in the biotech sector.
The NASDAQ Biotechnology Index gained 24.6% so far this year. This is in sharp contrast to last year’s performance when the index was down 22%.
However, despite the strong performance, investors are keen to know whether the rally will continue and what factors will drive the same.
These companies are likely to see continued demand for their products, given an accelerated increase in aging population and the proportionate increase in diseases.
Moreover, the FDA has approved far more drugs so far in 2017 than it did in the whole of 2016. Hence, a faster drug approval process along with strong pipelines, innovative treatments, impressive results, and increased health care spending should support further growth in the sector.
Though the momentum in the biotech sector is likely to continue, it’s a good idea to avoid a few stocks that will possibly lose their momentum soon despite significant year-to-date gains.
3 Small Biotech Stocks to Avoid
Avoiding stocks that have represented significant share price gain could be a bit tricky. However, we have taken the help of the Zacks Investment Research
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