Analysts back biotech & healthcare trusts as sector struggles

Majority trading on a discount

Biotechnology stocks have plummeted since pandemic peaks and the majority of investment trusts that focus on the sector have fallen, unsurprisingly, to discounts. However, analysts at Stifel have said this provides a “fertile environment for active funds to pick through the wreckage” and the trusts themselves are worth another look. Meanwhile, Berenberg say the healthcare peers also should not be ignored.

There are seven trusts in the Association of Investment Companies (AIC) biotechnology and healthcare sector. Of these just two are trading on premiums, BB Healthcare and Syncona, which are on 1.7% and 13.5% premiums respectively. The remaining five range from discounts of 1.2% (Biotech Growth) to as high as 14.6% (RTW Venture). These discounts are understandable given Refinitiv data, reported by the Financial Times today (10 February), shows 83% of recent biotech listings are now trading well below their IPO price. "The sector was in vogue following the discovery of the Covid-19 vacci...