This Biotech ETF Is Still Well Below Its 2021 Peak. Analysts Say That Is Exactly Why to Buy It.

The biotech industry has been a robust roller-coaster over the last half decade. The State Street SPDR S&P Biotech ETF (NYSE: XBI), which tracks the biotech portion of the S&P 500, started in January 2021 as high as $175, when it was the height of the pandemic. Since then, it has dropped as much as over 50%, to $63 (in 2023), making its way to $104, then plummeting back down to $66 in April 2025 after President Trump’s tariff announcements. XBI has since climbed back to the $128 region at the time of this writing. This still leaves a nearly 45 point upside before technical all-time high resistance is hit. 

Biotech analyst Salveen Richter of Goldman Sachs was interviewed on CNBC, expressing a bullish sentiment on biotech for the rest of 2026. Jared Holz of Mizuho has echoed these same prognostications. 

State Street SPDR S&P Biotech ETF

XBI has $8 billion AUM and 145 biotech companies in its portfolio.

An ETF designed to track the S&P Biotechnology Select Industry Index, XBI has gained +58% in the past year.  Liquidity is not a concern, with an average daily volume of 10 million shares. At $8 billion net assets, it’s one of the largest Healthcare sector ETFs in the market at present. 

XBI has a twist to its composition: while it tracks the S&P Biotechnology Select Industry Index, XBI equally weights its roughly 145 stocks. This gives a stronger tilt towards smaller companies that may exhibit surges of buying activity due to new breakthroughs, FDA trial approvals, M&A announcements, or other events that would not register in a market-cap weighted ETF.  TipRanks has a 55% “strong buy” consensus rating for XBI. 

The Top 10 holdings:

1. Moderna (2.25%)
2. Roivant Sciences Ltd.  (1.74%)
3. Vacxyte, Inc. (1.73%)
4. Arcellx, Inc. (1.66%)
5. Revolution Medicines, Inc. (1.59%)
6. Praxis Precision Medicines, Inc. (1.57%)
7. Amgen, Inc. (1.50%)
8. Gilead Sciences, Inc. (1.49%)
9. Amicus Therapeutics, Inc. (1.48%)
10. Miriam Pharmaceuticals, Inc. (1.41%)

The Case For the Bulls

Interest rate cuts, increased M&A action, and A.I. srug discovery acceleration are what has biotech bulls excited for 2026.

The analysts have cited three reasons for their biotech industry optimism throughout 2026:

1. Interest Rates: When the vast majority of central banks around the world were cutting interest rates, Federal Reserve Chair Jerome Powell stubbornly refused to follow suit. . The US economy roared ahead, regardless, fueled by President Trump’s tariff and trade negotiation policies, trillions in new US investment commitments, virtually eliminated inflation, which has been now shown to be in double digits during the Bidenomics era, no thanks to Powell, who cut rates that fueled inflation even higher. Now that Powell’s term comes to an end in May, the odds of a long overdue interest rate cut is stronger than ever – and this will result in reduced borrowing costs for financing ongoing FDA clinical trials.
2. Mergers & Acquisitions: Lower financing costs will also give biotech M&A activity a huge boost. Estimates predict 15%+ growth for 2026. The Big Pharma companies are all on the prowl for acquisition targets. Companies like Eli Lilly, GSK and Gilead are desperately seeking pipeline replacement to make up for revenue losses in 2025. With the areas of Oncology, Metabolic disorders, radiopharmaceuticals, and I&I (Inflammation and Immunology), M&A interest is particularly keen. However, the days of “pie in the sky” startup biotech company acquisitions are over. Best candidates are those who already have drugs in Phase II or Phase III FDA trials. 
3. A.I.: A.I. has been shown to possess the capacity to compress a decade of drug discovery work into just 2-3 years. The normal cycle takes a decade. 

XBI is still trying to recover from its post-pandemic drop of over 50%. The climb over the past year has been encouraging, and that 2021 all-time high is still a level that many fundamental and technical analysts alike think is achievable. That still means there are still nearly +50 points of potential upside from current levels at the time of this writing. 

Another plus in its favor is that, apart from Moderna, XBI doesn’t appear to carry any sizable exposure in companies involved with making Covid-19 vaccines. The recent disclosures as to concealed risks, miscarriages, cancers, and myocardial infections that can be traced directly to those companies will be a major liability cloud for the next few years.