Opinion: Four reasons for investors to buy biotechnology stocks now (05-20-2016)

May 20, 2016

By MICHAEL BRUSH

Beaten-down biotechnology stocks have been so cheap for so long, rattled investors pray every day that a big drug company with firepower will swoop in and buy one to spark interest in the industry.

They got their wish Monday when Pfizer PFE, -0.21% said it agreed to acquire Anacor Pharmaceuticals ANAC, -0.27% for $5.2 billion. Elsewhere, a battle over cancer-drug company Medivation MDVN, -0.03% is heating up. Sanofi SNY, -1.03%is turning the screws to get the company to agree to a takeover, and other bidders are circling.

Those takeover efforts are a good signal that biotech stocks are just too cheap — in case you hadn’t noticed. This is just one of several reasons the group may soon take a sustained turn for the better, say biotech experts.

…“It reminds people that we have real upside in the space, and not just downside,” says John McCamant of the Medical Technology Stock Letter. “It basically balances out the declines caused by Phase III blowups.”

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