With many now expecting interest rates to finally start the move higher as early as next month, it is a fascinating study to see how interest rates affect biotech stocks. A new research report from Merrill Lynch make the case that investors may not need to be concerned about a “risk-off” environment when it comes to biotech stocks, especially large cap leaders.
The Merrill Lynch team looked at large cap biotech leaders and how interest rate increases may play a part in stock performance. The research suggests a distinct lack of negative correlation between higher interest rates and biotech stock performance, especially when it comes to large cap leaders.
We screened the Merrill Lynch biotech universe for large cap biotech stocks that are rated Buy that should do just fine even as rates start to go higher.
For some time this stock has been considered by some firms as a potential acquisition target, and in the spring it was the big buyer. Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) bought Synageva Biopharma for a whopping $8.4 billion in cash and stock. That move added products and pipeline to compliment Soliris, the company’s only marketed product. Soliris is prescribed for the treatment of patients with myasthenia gravis, a rare neurological disorder that reportedly affects some 13,600 people in the United States.
While Soliris sales beat consensus estimates when the company reported earnings, and 2015 revenue guidance was increased, it was below what some on Wall Street expected. The Merrill Lynch analysts feel it may be conservative, and they think the company will beat earnings expectations in the last half of 2015.
The Merrill Lynch price target for the stock is $227. The Thomson/First Call consensus price target is $225.61. The stock closed on Friday at $189.62.