Market Overview

Schroer: Biotech Will Turn Around

Schroer: Biotech Will Turn Around

The iShares NASDAQ Biotechnology Index (ETF) (NASDAQ: IBB) has lost more than 26.5 percent since the beginning of the year. Allianz director John Schroer was on CNBC Friday, discussing this pullback seen in the biotech sector and the opportunities for turnarounds.

The expert started by saying he does not believe selling the biotech sector right now is a very good idea.

“We’ve had so much carnage in the sector… that’s off 50 percent from the highs,” he added, attributing the decline to the fears around the U.S. presidential elections, political rhetoric and macro conditions.

“Once we find out who wins the election, I think regardless, there’s very little that the government is going to do to control pricing. So, that’s a good thing,” Schroer explained. “However, it is important to remember that the cure for high prices is high prices. So, the private sector has been doing what we fear the government will do; and they’re doing that already,” he continued.

“We think that, in an inverse kind of a relationship, you’ve seen these [biotech] shares sold down so much through the fear of investors, that the risk inherent in the paper is actually much less than where we were a year ago,” the analyst stated.

Related Link: Volatile Market Flatlines Biotech IPOs

Stocks To Buy

When questioned about the most recent stock he bought in the pullback, Schroer said it was Pfizer Inc. (NYSE: PFE). The expert also recommended Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) due to its “very highly protected portfolio of drugs.”

Other stocks comprised among Schroer’s top picks (well positioned companies with attractive valuations and promising innovation) include:

  • UnitedHealth Group Inc (NYSE: UNH)
  • Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX)
  • Celgene Corporation (NASDAQ: CELG)
  • Bristol-Myers Squibb Co (NYSE: BMY)

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Image Credit: Public Domain

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