Biotech Is Acting ‘More and More Like’ Bitcoin, Evercore Says
(Bloomberg) -- For Evercore ISI analyst Josh Schimmer, the heady run up in biotech stocks makes them look “more and more like Bitcoin these days,” with a speculative mania sweeping away the usual gauges of value.
Fueled by money pouring in from individual investors on low-cost trading sites like Robinhood, the industry’s surging share prices and booming initial public offerings have increasingly become disconnected from traditional fundamentals, Schimmer wrote in his latest “Weekend Musing” note.
He called it a “New Biotech World Order” that’s likely to stick around as long as interest rates are low and retail traders keep rushing in.
The Nasdaq Biotechnology Index, a closely-tracked barometer of the industry, has jumped 35% in the past year to more than double the return for the S&P 500.
But some companies have surged far more. Novavax Inc., the producer of a Covid-19 vaccine, is up 3,435%. Altimmune Inc., another vaccine maker, surged 1,227% over the same stretch. Either makes Bitcoin’s more than 450% jump look small in comparison. Bitcoin surpassed the $55,000 mark for the first time on Friday.
Read more: Retail Speculation Fuels Record Month of Stock Sales
The scale of the stock rallies -- as with the concept of Bitcoin -- have left “old school” investors used to more standard measures of value “struggling to understand these high-flying stocks which are in the hands of investors who use very different fundamentals,” Schimmer said in the note.
He joked that “biotech is just an ‘N’ and a letter jumble away from Bitcoin,” adding in an email that there is “a little truth in jest and some provocative thinking.”
©2021 Bloomberg L.P.