Are biotech stocks too risky? ETF to safely avoid volatility | Investing.com

Biotechnology-related stocks refer to stocks of companies that research, develop, and sell therapies and healthcare-related products, and technology is generally used for living organisms, biological systems, or their derivatives.

With a market size of approximately $800 billion in 2021, the global biotech industry spans various fields including genomics, medicine, pharmaceuticals, agriculture, and food. The biotechnology market is expected to double in the next 10 years.

Therefore, the market pays attention to it. However, as promising as they are, biotech stocks are unlikely to be a “safe” investment destination. Failures during the development phase are common. In fact, only a handful of biotech companies are successful enough to make regular money. Most businesses don’t make enough money.

In addition, stock prices of biotechnology companies are volatile. For example, reports of an application being approved by the U.S. Food and Drug Administration (FDA) can send stock prices skyrocketing into double digits within hours. On the other hand, if the test data is unsatisfactory, stock prices may fall sharply overnight.

Over the past 12 months, has fallen 10.4%. On the other hand, was a positive return of around 6.8% and was around 1%.

NASDAQ Biotechnology Index Weekly Chart

NASDAQ Biotechnology Index Weekly Chart

As such, contrarian investors may see such a drop in biotechnology stocks as an opportunity to buy in this sector.

An example of biotechnology-related stocks

The InvestingPro site presents different types of biotech stocks (Example 1, Example 2, Example 3). First, looking at activity by market capitalization, Abbott Laboratories (NYSE:) and Bristol-Myers Squibb (NYSE:), which are major biopharmaceutical companies in large stocks, Seagen (NASDAQ:), which focuses on cancer treatment drugs, Israel Teva Pharmaceutical (NYSE:) and so on.

Readers looking at target market stock prices may want to know that some biotech stocks may rise significantly from current stock prices. For example, Abbott Laboratories, Irish generic drug Endo International (NASDAQ:), cancer screening agency group NeoGenomics (NASDAQ:), cancer research company MacroGenics (NASDAQ:), Taro Pharmaceutical Industries (NYSE :).

The cheapest stocks in this segment are radiation therapy company Accuray (NASDAQ:), biopharma heavyweight Biogen (NASDAQ:), cancer specialty FibroGen (NASDAQ:) and generics in India. Dr. Reddy’s Laboratories (NYSE:) are on the list. .

Stock prices for high-growth biotech stocks typically come at a premium. Cancer diagnostics company Exact Sciences (NASDAQ:), widely accepted biotech company Regeneron Pharmaceuticals (NASDAQ:), life sciences group Repligen (NASDAQ:) and clinical-stage biopharmaceutical company Xencor (NASDAQ:) .It can be said that it is an attractive brand.

Finally, passive income investors include: biopharmaceutical drug development company Gilead Sciences (NASDAQ:) currently has a dividend yield of 4.8%, and human pharmaceutical company Amgen (NASDAQ:) has a dividend yield of high dividend of 3.1%. noting that there are.

Of course, choosing a biotech stock that fits the purpose of an individual portfolio requires a great deal of due diligence. Private investors can also consider investing in exchange-traded funds (ETFs), which provide a wide range of exposure to the biotech industry, which they regularly cover.

The previously mentioned ETFs include:

  • First Trust NYSE Arca Biotechnology Index Fund (NYSE: ) – down 6.3% year-to-date

  • SPDR S&P Biotech ETF (NYSE: ) – down 22% year-to-date

  • VanEck Biotech ETF (NASDAQ: ) – down 13.6% for the year

  • ETF Virtus LifeSci Biotech Products (NYSE: ) – down 11.3% year-to-date

In light of the discussion so far, this article will introduce you to other attractive ETFs for investors seeking exposure to biotech-related stocks.

iShares Genomics, Immunology and Health ETF

iShares Genomics Immunology and Healthcare ETF (NYSE:) invests in global companies that will benefit from long-term growth and innovation in genomics, immunology and bioengineering. Many of these stocks are major R&D centers. The ETF began trading in June 2019.

IDNA Weekly Chart

IDNA, which is linked to the NYSE FactSet Global Genomics and Immuno Biopharma Index, currently holds 50 stocks. The top 10 stocks in the portfolio represent more than half of their net worth of $235.7 million.

About two-thirds of them are American companies. This is followed by companies in Germany, Japan, France, Denmark and Switzerland.

The main holdings are Exelixis (NASDAQ:), Sanofi (NASDAQ:), Regeneron Pharmaceuticals, Ono Pharmaceutical (OTC:) and Takeda Pharmaceutical (NYSE:).

The ETF is down 22.9% this year and 24.2% over the past 12 months. The price-to-earnings ratio (PER) is 15.41 times and the price-to-book ratio (PBR) is 3.05 times. Interested readers will find the IDNA variations attractive at the current level.

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