Here’s why ‘biotech’ could outperform in 2022

By:
on Jan 4, 2022
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  • The Nasdaq Biotechnology Index has tanked over 10% in two months.
  • iCapital's Anastasia Amoroso says NBI could double in the coming years.
  • She sees more than one catalyst for the biotech industry in 2022.

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The Nasdaq Biotechnology Index (NBI) has tanked more than 10% in two months, but iCapital’s Anastasia Amoroso says it could double in the coming years.

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Highlights from Amoroso’s interview on CNBC’s ‘Halftime Report’

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After a weak 2021, Amoroso expects NBI to pick up this year. She sees President Biden’s “Build Back Better” plan as a positive catalyst for the biotech industry. On CNBC’s “Halftime Report”, Amoroso said:

Valuations of biotech are half the S&P 500 right now because there’s this perpetual overhang of regulatory reform drug pressing that’s destructive for biotech. If the build back better plan is passed that has constructive drug pricing provision, that overhang of drug pricing concerns will go away.

Josh Brown also sees significant upside in biotech this year. He bought iShares Biotechnology ETF on Tuesday. IBB has 50% of its market cap invested in the top ten biotech names that Brown says are set to see a decent 2022.

Drug approvals could be another catalyst for the biotech industry

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Amoroso expects drug approvals to pick up this year after a halt due to the COVID-19 crisis, which, she added, could further help the biotech space outperform in 2022.

48 different drugs are waiting to be approved. They’re in the pipeline. There are clinical trials that weren’t conducted, their inspections had to be put on hold because of COVID. But as we recover from it, some of that activity will resume. So, I’m a buyer because there’s a lot to like here.

According to iCapital’s chief investment strategist, JPMorgan’s healthcare conference scheduled for next week could start to revive the biotech stocks. The largest U.S. investment bank has arranged for a digital-only conference this year amidst rising concerns of Omicron.  

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