Alexion Pushes Down IBB’s Performance



IBB’s large caps are under pressure

The large-cap stocks of the iShares NASDAQ Biotechnology ETF (IBB) continued to be under pressure and fell by 1.1% on March 14, 2016. Among 13 large-cap stocks, only two stocks advanced and 11 stocks saw a decline. Large caps have a significant impact on the fund’s performance, as they account for ~66.5% of IBB’s portfolio.

The above graph shows the performance of IBB’s large-cap stocks along with the SPDR S&P 500 ETF (SPY). Since March 3, 2016, IBB’s large caps have returned -3.3% while SPY has returned 1.9%.

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Alexion is down on profit booking

Alexion Pharmaceuticals (ALXN) was the biggest loser among IBB large-cap stocks. The stock went down by 3.4% and closed at $134.50. It was trading below the 20-day moving average price of $143. The latest data on short interest, released on February 29, indicate that there is an increase in the short interest numbers from 2.2% to ~3.8%.

Year-to-date (or YTD), Alexion Pharmaceuticals has returned -29.5%. Alexion has a book value of $36.60 per share. With its current price, the stock is trading at a price-to-book value of ~3.7x and a 2016 forward price-to-earnings of ~25.9x. Regeneron Pharmaceuticals (REGN), Vertex Pharmaceuticals (VRTX), and BioMarin Pharmaceuticals (BMRN) have a lower book value than Alexion with price-to-book values (or PBV) of ~10.7x, 22.4x, and 5.8x, respectively, which is also higher than Alexion Pharmaceuticals. Alexion Pharmaceuticals accounts for ~4.1% of IBB’s portfolio.


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