After disappointing investors last year, the iShares Nasdaq Biotechnology ETF (NasdaqGM: IBB), the largest biotechnology exchange traded fund by assets, and rival biotechnology ETFs are rebounding and plenty of market participants are taking notice.
Up about 12.6% year-to-date, IBB continues trading the technically important $300 area. The ETF resides almost 7% above its 200-day moving average.
“This great start to 2017 follows a wretched 2016, in which the ETF fell more than 21 percent due in part to highly publicized concerns over drug pricing. Looking forward, Oppenheimer technical analyst Ari Wald advises that investors “buy biotech,” calling the IBB one of his favorite trade ideas,” reports CNBC.
Biotechnology historically trades at multiples that are elevated relative to broader benchmarks, but after last year’s of struggles for biotechnology names, some analysts see value with some big-name biotech stocks.
IBB, which holds nearly 190 stocks and is a cap-weighted ETF, has a price-to-earnings ratio of just over 21 and a price-to-book ratio of 4.92. The ETF’s three-year standard deviation is just over 25 percent.