The SPDR S&P Biotech ETF (NYSEArca: XBI), the third-largest biotechnology exchange traded fund by assets, is among the previously high-flying biotech ETFs that have been sapped by politicians, looking to earn voters favor in an election year, attacking high drug prices.
Investors who are closely watching the presidential race will want to keep an eye on Democratic nominee Hillary Clinton in the coming months. If Clinton makes her way to the Oval Office and implements more regulation on pharmaceutical drug pricing, biotech companies may underperform the broader market.
SEE MORE: Clinton Delivers Poison Pill To Biotech ETFs
Last month, Clinton, put the spotlight on Mylan (NasdaqGS: MYL) EpiPen prices, triggering a selloff in biotech exchange traded funds and reminding investors of political risks in an election season.
That was the third time over the past year that Clinton’s comments upended drug stocks. The presidential runner has repeatedly censured aggressive drug pricing. With most polls giving her a wide margin over Republican nominee Donald Trump, the markets are taking Clinton’s words more seriously.
[related_stories]However, some market observers see things improving for XBI, at least on a technical basis.
“A chart of the S&P biotech tracking ETF XBI shows that while the market has been down since last Friday, biotech has held. The XBI specifically broke through a downtrend line and has broken through a $58 resistance level, according to Oppenheimer technician Ari Wald in a CNBC interview.
SEE MORE: Resisting the Temptation of Biotech ETFs
Rare are the occasions that biotechnology stocks and exchange traded funds are seen as offering value. In fact, the sector historically trades at multiples that are elevated relative to broader benchmarks, but in a year of struggles for biotechnology names, some analysts see value with some big-name biotech stocks. However, there are some discounts available in the usually pricey biotech space.
“Erin Gibbs, chief investment officer at S&P Global, believes investors should take the biotech bet from a fundamental standpoint. According to Gibbs, the average upside for stocks in the XBI is 30 percent from current target prices,” reports CNBC.
For more information on the biotech sector, visit our biotechnology category.
SPDR S&P Biotech ETF
