The Nasdaq Health Care subindex is down nearly 10% from its high in early September, leaving investors wondering if now would be the time to “buy the dip”; especially after Merck’s big news this morning that sent shares of Moderna, Novavax, and BioNTech crashing down.
Michael Bapis’ remarks on CNBC’s “Trading Nation”
According to Vios Advisors’ Michael Bapis, the health care space is still a buy after Merck’s COVID pill. On CNBC’s “Trading Nation”, he said:
Our population is ageing faster than it has ever aged, and the longevity of life has become more expanded than ever, which means people are more dependent on the pharmaceutical space.
Bapis sees the biotech sector as a way to play the “growth to value rotation” as many of these companies have a dividend yield of 3.0% to 6.0% and a PE ratio that tops at low double digits – indicating significant upside in the future.
Piper Sandler’s Craig Johnson disagrees
Piper Sandler’s Craig Johnson, however, disagrees and rates the entire health care space at “underweight”. During the same interview, he said:
In biotech and pharma companies that represent about 41% of the space, we’re seeing absolute price moves up but poor relative performance versus the rest of the market.
Johnson sees “equipment makers” within the health care space as still a better pick than pharma or biotech at the moment. He further added:
XBI and the smaller biotech side chart looks like it’s still consolidating sideways and not ready to break yet. So, I’m not a fan of the space.
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