Ray of Hope for Biotech Valuations
Let's hear some good news!
There has been an enormous amount of turnover on biotech analyst desks as of late. When analysts leave, coverage either is dropped or becomes stagnant. They are not able to rouse the sales troops by pounding the table on their best ideas. Even the market maker/broker side of the business backs off biotech positions because they have no ready support in the form of a knowledgeable, in-house guide.
At ASCO, we met about a dozen new biotech analysts who have filled positions vacant or in flux for a number of months. These new folks are in the time-consuming process of creating new research portfolios for their employers. They are nearing the end of that process and we should see a stream of new coverage initiations coming from some very respectable houses.
While I doubt this will be enough to stem the macro forces aligning against biotech stocks, it does mean those few companies lucky enough to get coverage could buck the trend for some period - particularly if the late-June lift in the market has some legs after the Independence Day holiday.
And the sector needs all the help it can get right now.
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