J.P. Morgan places confidence in biotech sector

BANGALORE, India J.P. Morgan has revealed its confidence in healthcare stocks in the biotech sector, citing historical indications that they will beat the U.S. recession and out-perform the market over the next six to 12 months, according to published reports.

The Amex Biotechnology Index .BTK fell about 3 percent this year while the S&P 500 has fallen at about 7 percent, according to published reports, which supports their claim. The brokerage also cited their “three horsemen,” or preferred choices, as Genentech, Gilead and Celgene, and predicted that they will rise more than 5 percent in 2008.

J.P. Morgan expects its market value to rise and the sales of their drugs, such as Celgene’s cancer drug, Revlimid, and Gilead’s two HIV drugs, Truvada and Atripla, to beat Wall Street estimates.

In response to its focus on the biotech sector, Morgan has shied away from investing in small- to mid-sized stocks that may be in danger because of the recession. “We believe poor share performance, despite improved earnings outlooks, clearly demonstrates the insignificance of earnings—and even revenue—for small- and mid-sized biotechs, especially in a challenging macro environment,” the company reported.