The $8.8 billion IBB allocates 37.8% of its combined weight to biotech giants Gilead (NasdaqGS: GILD), Amgen (NasdaqGS: AMGN), Regeneron (NasdaqGS: REGN), Biogen (NasdaqGS: BIIB) and Celgene (NasdaqGS: CELG). The $2.4 billion XBI features deeper mid- and small-cap exposure and its top 10 holdings range in weights from 1.35% to 1.97%.
S&P Capital IQ has a four-star rating on Amgen and a five-star rating on Gilead. Over the past three years, IBB and XBI are up 209.3% and 217%, respectively, prompting naysayers to say the biotech industry is richly valued. S&P Capital disagrees. [Quieting Biotech Boo Birds]
“Despite the strong gains for the industry the last few years, biotech is far from expensive in our opinion. Indeed, the S&P 1500 Biotechnology industry trades at forward P/Es of 18.2X (2015) and 15.2X (2016), below that of the health care sector’s 19.3X and 16.5X and the broader S&P 1500 index’s 18.4X and 15.9X, respectively,” said the research firm.
SPDR S&P Biotech ETF
