“From a fundamental perspective, XBI trades a 12-month forward price/sales of 11.94 vs. five-year average of 14.02,” adds Mazza. “XBI appears to be reasonably valued based on its moving averages and has found support in this current market.”
Though it resides 8.4% below its March 19 high, XBI is still firmly above its 50- and 200-day moving averages at 6% and 28.5%, respectively, above those lines.
With healthcare mergers and acquisitions soaring, XBI’s upside potential can be further solidified. Roughly a third of the ETF’s 100 holdings have been rumored to be possible takeover targets.
“In addition, M&A has remained supportive of the industry with a 313% increase in M&A activity over the last year,” said Mazza.
SPDR S&P Biotech ETF
