Yahoo Finance Inside XBI’s Large Caps: Incyte Pulls Down Large Caps on Earnings Concerns
Has the Rumored May Fall Begun? XBI Seems to Think So
XBI large caps
On May 4, 2016, the large-cap stocks of the SPDR S&P Biotech ETF tumbled collectively by 2.5%, underperforming the SPDR S&P 500 (SPY), which fell by 0.6%. All 11 large-cap stocks of XBI, in fact, declined from the previous day’s close.
Incyte (INCY) took the worst hit among them, dropping by 4.7%. Biogen (BIIB) and BioMarin Pharmaceuticals (BMRN) shed 3.9% and 3.5%, respectively. The best-performing large cap in XBI was Abbvie (ABBV), which fell by only 0.5% during the period.
The above graph reflects the daily changes in XBI large caps along with SPY and XBI. Until May 4, 2016, XBI’s large caps have been down by 2.5%, while SPY has shed 0.7%, and XBI has dropped by 5.9%.
Incyte drops
Incyte Pharmaceuticals (INCY) was XBI’s biggest large-cap loser, falling by 4.7% on May 4. The stock declined as analysts from Oppenheimer expected the revenue from Jakafi to be around $180 million, as compared to previous estimates of $191 million.
Incyte will announce its 1Q16 earnings on May 9, 2016. But the Bloomberg analyst consensus estimates that the company’s 1Q16 revenues will be ~$264.2 million and that its adjusted net income will be $68.8 million.
Incyte closed at $68.69 and was trading below its 20-day moving average. YTD (year-to-date), the stock has already fallen by 36.6%. Incyte is trading at a 2016 forward price-to-earnings multiple of ~138.2x—the highest among XBI’s large caps. The company has a book value of $0.92 per share, and with its current price, the stock is trading at a price-to-book value of ~74.9x.
Analyst recommendations and target prices
Analysts estimate the 12-month target price of Incyte to be $91.7, indicating a potential return of 33.5% from its current price. Among the 19 analysts who track Incyte’s stock, 18 have recommended a “buy,” one has recommended a “hold,” and none has recommended a “sell.” Incyte has a weight of ~1.4% in XBI’s portfolio.
Now let’s look at the latest performance of XBI’s mid caps.
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