Biotech ETF Screams Higher on Increased M&A and Positive Earnings

ishares_logoIt was another solid week of gains for the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) as investors took their cue from bullish earnings reports out of Biogen (NASDAQ:BIIB) and Amgen (NASDAQ:AMGN), along with continued takeover rumors floating all around the biotech space.

Consolidation is certainly a theme that can drive further bullish momentum. The Medivation (NASDAQ:MDVN) auction process (as you can call it) has grabbed headlines for weeks, and just Friday we heard Sanofi (NYSE:SNY), Pfizer (NYSE:PFE), Gilead (NASDAQ:GILD), & Celgene (NASDAQ:CELG) have all expressed interested in bidding for MDVN. With the company acknowledging it would like to get a deal done, analysts feel a mid-August timeline could bring clarity to the situation.

This upcoming week will likely produce more rumors of deals not to mention earnings results from the likes of Regeneron Pharmaceuticals (NASDAQ:REGN) and BioMarin Pharmaceuticals (NASDAQ:BMRN).

Looking at the iShares Nasdaq Biotechnology ETF from a technical standpoint, the ETF cleared its 50-day moving average this week and will not have as much overhead resistance as it had prior. The ETF’s price range has been quite volatile this year from highs of $338-$340 early in 2016 to lows of in early February, the ETF has slowly been coming off those February lows but are still down 14.45% year-to-date.

Here’s a look at the top 10 holdings for IBB:

IBB-holdings-2016-07-31

And here’s what the ETF’s year-to-date chart looks like:

IBB-2016-07-31

Expect the fireworks to continue in coming weeks, with more earnings reports, M&A activity, and analyst calls sure to impact the always-volatile biotech space. Finally, just in case you missed it, be sure check out our recent post, A Biotech Investor’s Worst Nightmare Just Came True.