After three successive days of losses, U.S. equities have rebounded sharply in trading today led by the NASDAQ. The NASDAQ is gaining on the back of a sharp rebound in the technology and biotechnology sectors. Both sectors have been hammered lately.
The biotechnology sector, in particular, has come under significant selling pressure during the current selloff. Before today’s bounce back, the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) had fallen more than 26%. The IBB is up more than 3% in mid-day trading.
The sharp pullback in biotech stocks though has led to some attractive valuations. Gilead Sciences Inc. (NASDAQ:GILD), which recently reported strong fourth-quarter results and also guided for more than $30 billion in 2016 revenue, is now trading at just 7.5x earnings.
This is significantly below the average for the S&P 500. Another large cap biotechnology company that is trading at low multiples is Amgen Inc. (NASDAQ:AMGN). Although not as cheap as Gilead, Amgen is still trading at a discount to the S&P 500. AMGN currently trades at P/E ratio of 16.20x. AMGN also has a dividend yield of 2.72%.
In the pharmaceutical space, Merck & Co. Inc. (NYSE:MRK) is now yielding 3.67%. Rival Pfizer Inc. (NYSE:PFE) is also offering an attractive yield of 4.02%.
There are also opportunities in the small and micro-cap space. Elite Pharmaceuticals Inc. (OTCQB:ELTP), a Northvale, New Jersey-based specialty pharmaceutical company, is currently trading at a P/E ratio of 18.77. ELTP owns an abuse deterrent technology, ART(TM), which is a multi-particulate capsule containing an opioid agonist in addition to naltrexone used primarily in the management of alcohol dependence and opioid dependence.
This morning, Elite Pharmaceuticals announced its results for the quarter ended December 31, 2015. For the December quarter (the company’s third quarter), consolidated revenue totaled $2.2 million, representing an increase of 61% on a year-over-year basis.
The increase in revenue was driven by continued growth of ELTP’s niche generic product lines. During the December quarter, the company invested another $3.2 million in the development of SequestOx(TM), the first product in ELTP’s line of abuse-deterrent opioids.
Commenting on the Q3 results, Nasrat Hakim, President and CEO at Elite Pharmaceuticals, said it was a special quarter for ELTP as the company successfully completed the studies for its first abuse deterrent pioid SequestOx™ and in January submitted its first NDA.
Shares of ELTP are down close to 5% on the news; however the stock is up substantially since its October lows.
