The last year hasn't actually been all that bad for biotech, as the S&P Biotech ETF (NYSEARCA:XBI)
has outperformed the S&P 500 by about six or seven points. Whether
or not the XBI is a great benchmark for the biotech industry is beside
the point, though; by any standard Clovis Oncology (NASDAQ:CLVS) has done poorly since I wrote about it in late December of 2013.
Down almost 30% since then, some of the weakness may be due to less
risk appetite from biotech investors, but I think it has more to do with
growing concerns over competition for the company's lead drug CO-1686
(or rociletinib).
I don't take it lightly when any stock I
recommend is down 30%, but I also acknowledge that that can be the way
it goes in biotech - in the absence of solid data to go on, investors
obsess over the tea leaves and can run hot or cold on a stock to
dramatic effect. I was concerned in December that analysts were already
too aggressive with their assumptions about market share and odds of
approval, but my own numbers haven't changed that much. With a fair
value of $75 and several news events on the way, Clovis shares could
turn the tide over the next six to 12 months (or smash on the rocks).
Follow this link to the full article:
Competition And Momentum Weighing On Clovis Oncology
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