A new bull market is unlikely until the U.S. Federal Reserve starts to go easy on the interest rates. Still, there are opportunities that could be rewarding in the back half of 2022.
Fahmy’s bull case for the biotech stocks
One such opportunity is in the biotech stocks, as per Joseph Fahmy – Managing Director at Zor Capital. Explaining his constructive view this morning on CNBC’s “Worldwide Exchange”, he said:
I like [biotech] for its relative strength. When the market made a low in May, and made a new low in June, the XBI held up better. So, it’s showing that the [biotech stocks] are absorbing this correction better.
The SPDR S&P Biotech ETF that Fahmy says is one of the best means to play the biotech stocks is down roughly 35% versus the start of the year.
Why else does he like the biotech stocks?
“XBI” has been in a freefall since February 2021. But the Zor Capital expert likes biotech stocks for the second half of 2022 also because the Pharma giants have exceptional balance sheets at present.
Big Pharma, their balance sheets are pristine. They have tons of cash on hand. So, you’ll see in the second half Biotech outperform led by M&A from big Pharma. We’ve already seen it earlier this year and we’ll continue to see it in H2.
Fahmy expects the U.S. central bank to pause its rate hike cycle in September, making way for some “sustained uptrend” in the broader market in the final quarter of 2022.
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