We’re coming up on the six-month anniversary of a chat we had about how a tiny number can yield big profits.
Back on Oct. 27, I noted the roughly $3 trillion global information technology sector grew just 3.3% in last year’s third quarter.
But I went on to say if you find the right tech leader, then that aggressive company could grow earnings – and your stock profits – by a big multiple over that number.
To hear Wall Street tell it, AbbVie Inc. (NYSE: ABBV) drove right into a ditch last month.
Here’s the thing. The company announced results of a Phase 2 trial on March 22 that were disappointing but hardly fatal. The results mean AbbVie won’t seek fast-track approval for its promising antibody-drug conjugate, Rova-T, but it still expects to be able to take it to market in the near future.
Wall Street overreacted – no surprise there – and AbbVie shares lost 15% in three sessions.
Here’s the thing. Wall Street’s overreaction to AbbVie’s disappointing U.S. Food and Drug Administration trial results weren’t the only reason for its share-price plummet.
You see, though it shouldn’t be, biotech is in the dog house – and investors are primed to punish stocks in the sector for just about anything.
In fact, since hitting a three-year high in August 2015, the Nasdaq Biotech Index is off 6%. During that stretch, the S&P 500 is up nearly 35%.
Biotech is down for three main reasons. Wall Street is worried about…