Irrational Selloff Adding More Irrational Volatility

They jumped to call the biotech sector a bubble, accentuating its volatility. Instead of saying WOW about Gilead’s (GILD) 3.49 billion net income, calculated as $2.18 a share, they called for a selloff of the stock. The 3.49 billion net income and $2.18 income a share are compared with $791 million, or 47 cents a share, a year earlier. This is big for us, but small for those who instigated the selloff of the stock and before it in the biotech sector.

Indeed, Gilead’s revenue more than doubled to $7.31 billion from $3.12 billion and on an adjusted basis, Gilead earned $2.43 a share while analysts are expecting less, much less than these numbers, including their exaggerated EPS of $2.23 on revenue of $6.72 billion.

This is good news, we remind, and GILD added more good news announcing its intention to pay a quarterly dividend of 43 cents a share and another good news about its intention to repurchase another $15 billion of its own shares.

The message the selloff of biotech sector’s BEST STOCKS meant to communicate is a mystery for the sane. Why do we think so? Because in the past couple of years, the biotech sector has achieved far more than what the drug industry has been able to hand the clinic in the history of mankind. Does somebody want us to sell the best of the best of the investment vehicles right now, thinking they reached the end of the road towards more breakthrough achievements?

We have news for them? The biotech solid firms that were subjected to selloff and still, are in the beginning, rather than the end of the road towards their great goals. Gilead has saved HIV patients and now HCV patients and still has breakthrough drugs filling its pipeline and so do the other scientifically solid biotech firms. They are developing near cures for cancer and genetic (hereditary and acquired) diseases. Looking into the near future, we expect a lot more from the biotech sector, including treating diseases still current medical textbooks label as untreatable with a condemnation decree on patients’ lives.

What happened yesterday to the biotech sector in the market of stocks is a temporary successful maneuver by professional traders whose professionalism did not prevent them from missing the rallying in the sector. They did add more fuel to the fire of biotech sector’s volatility. They did succeed in frightening investors in spite of the obvious lack of rationality in the malicious task they are carrying.

It happened before and it will happen again.

Let’s see how this drama, or tragedy, will unfold. We know for sure, though, how revolutionary and capable the biotech sector has become and how stopping this revolution through chaotic insane measures will either fail, or burn the dreams of the suffering patients together with the biotech companies’ ambitious goals and their shareholders investments.

We are in.

Prohost Forward-Looking: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Leave a Reply