I'm Eyeing Two Biotechs as Trade News Takes the Headlines
Movement for a U.K. deal would be limited and China would be a bigger catch; also, here's my plan for two stocks I'm watching.
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The indexes are still in positive territory on Thursday morning, but excitement about the announcement of a trade deal with the U.K. is limited. The problem is that the U.S. and the U.K. have been negotiating trade for decades, and an agreement in this case isn't a good blueprint for what is needed with other countries. It is a positive that a deal is made, but it doesn't provide much insight into the ability to make effective deals with other countries.
The meetings with China over the weekend will be far more important, and it is highly unlikely that there will be an agreement. At best, there will be some mutual cutting of punitive tariffs, but that will likely be enough for the market to celebrate.
I'm focused on some reactions to earnings reports this morning. My top small-cap biotechnology name, XERIS XERS, had a solid report with about 40% revenue growth. It is performing very well and has lifted the range of guidance for the year. The stock is still extremely cheap. The company will have an analyst day in early June to talk about a new product launch that has a potential billion-dollar market. I remain very bullish on the name as it trades up about 8%.
Yesterday, I mentioned ADMA biologics ADMA. As I stated, I didn't want to buy in front of earnings, but would consider buying on pullbacks afterward. The stock pulled back very sharply on a small earnings per share miss. The company had revenue growth of 40% and also announced a substantial buyback of shares.
Raymond James raised its price target to $32 from $25 and keeps a "Strong Buy" rating on the shares. The analyst states that "Adma's Q1 missed slightly from a non-recurring event and higher spend, but all the fundamentals are trending positively and 2025-2026 guidance was raised, still with a lot of room for upside, The firm adds that tariffs are "not an issue" for Adma.
I believe this sharp drop is an opportunity to accumulate shares, and I'm averaging in slowly.
Overall, technical action is good, even though the trade deal is not seeing the euphoric response that many had hoped for. The potential for something positive out of the Bessent-China meeting over the weekend will likely keep a bid under the market.
At the time of publication, DePorre was long ADMA, XERS.
