Goldman loves this ‘conversion’ sector — it’s down more than 50% in the past year
US biotech is an attractive option for Goldman Sachs, which, the company said, offers investors some “very attractive” entry points. Luke Barrs, head of fundamental equity, EMEA at Goldman Sachs Asset Management, told CNBC that there is a “transformational shift” happening in the healthcare sector, particularly in the healthcare sector. gene technology, a growing field of medicine that can personalize treatments for patients. Barrs flagged that the SPDR S&P Biotech ETF (XBI) “underperforms materially relative to the broader market.” XBI is down more than 40% this year and has fallen about 53% in the past 12 months. The S&P 500, by comparison, is down 21% so far and 11.7% in the 12-month timeframe. According to Barrs, some companies in the field have “immediate challenges,” such as developing drugs to get regulatory approval, which is expensive. However, he added: “A third of that universe is trading below cash on the balance sheet, so you’re looking at companies in a negative business value position. That sounds like it. is a very attractive entry point, if you buy into the long-term growth story.” Such companies are ripe for takeovers, Barrs said. “If you think about the exit strategy for some of these businesses, there’s clearly an opportunity for M&A in this area – where the big pharma companies can step in and get some new technology and This unique – is very attractive.” The 12 largest pharmaceutical companies now have about $600 billion in cash on their balance sheets, Barrs added. “The big pharmaceutical industry can easily get in and come up with a lot of new unique technologies, which gives you a very interesting shortcut, if you commit to some of those new and unique technologies. ” Other banks noted opportunities for biotech companies earlier this month. Piper Sandler analyst Christopher Raymond pointed to Cogent Biosciences as his favorite “below-observation” pick, with an excess rating, while Morgan Stanley’s Matthew Harrison preferred BioMarin Pharmaceutical. – Christina Cheddar Berk of CNBC contributed to this report.
