- Jonathan Poyer
Heathcare Inelasticity Enough to Outperform in 2023?
The S&P select biotech index broke above the trading channel it's been in since September despite initially selling off during the first day of the JP Morgan Healthcare conference. The index is now comfortably above the corresponding 50 and 200 day moving averages as the S&P 500 struggles to break out of a down channel that started in January of 2022.
Life Sciences bulls are looking to the ongoing earnings season to continue to validate the robustness of business model selling novel therapeutics in the current economic environment, further building upon the positive pre-announcements and upbeat guidance delivered at conference last week.
Case in point, Amarin Pharmaceuticals (AMRN) rallied up >60% YTD on revenue results that were ahead of street expectations.
This is in contrast to the S&P 500, where a growing chorus of bears are calling for more downward earnings revisions.
Many businesses outside of the life science that are exposed to elastic demand know well the risks of slowing inflation in the midst of a slowing economy as it must lead to a decline of GDP growth. More than >90% of companies are now in a buyback blackout period, potentially contributing additional volatility during earnings season.