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RBC Says Buy Big Biotechs Now for Possible Big 2016 Gains

We have talked about it for months here at 24/7 Wall St., and now many on Wall Street are talking about it as well. The selling in biotech, much of which was started by a tweet from Democratic presidential candidate Hillary Clinton last fall over drug pricing, absolutely destroyed the sector. Finally, that concern seems to be waning and investors are returning to the battered sector. Stocks got so cheap that they were trading as if there was no or little value in their product pipeline, an unheard of metric in biotech.

A new RBC research report notes that the XBI biotech index was up 13% over the past month, versus 5% for the S&P 500, and it contends that the political chatter and overhang worry is going away. The report also noted that at the recent conventions there was little to no mention of drug pricing.

What really look attractive now are the large cap leaders, and RBC has four rated Overweight.

Amgen

This company posted outstanding second-quarter earnings and the biotech giant remains a top stock for investors to buy. Amgen Inc. (NASDAQ: AMGN) focuses on areas of high unmet medical need and leverages its biologics manufacturing expertise to strive for solutions that improve health outcomes and dramatically improve people’s lives. A biotechnology pioneer since 1980, Amgen has grown to be one of the world’s leading independent biotechnology companies, reaching millions of patients around the world and developing a pipeline of medicines with breakaway potential.

The company posted revenues above expectations and showed strong expense management. It also raised guidance for revenues and earnings, and many on Wall Street think the numbers could be conservative. Amgen also reaffirmed interest in mergers and acquisitions activity as a way to sustain long-term growth.

Many on Wall Street point to the company’s tremendous pipeline and outstanding forward earnings and revenue capabilities. Amgen’s double-digit earnings and revenue growth rate is expected to continue for the foreseeable future because of the company’s very deep clinical pipeline, which includes potential blockbusters Repatha for high cholesterol and Kyprolis for relapsed multiple myeloma. Amgen also has one of the industry’s deepest biosimilar...


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