Health care in general is transforming due to an aging population, the Affordable Care Act and new technology. The demand for blockbuster drugs among investors and cures for diseases among patients and doctors has never been higher. The iShares Nasdaq Biotechnology ETF (IBB ) is up roughly 20% for the year. But not all biotech stocks are smart buys.
The companies listed are all large-cap biotech companies rated "Sell" by TheStreet Ratings. When you're done be sure to check out which big pharmaceutical companies to buy in the wake of Johnson & Johnson's (JNJ ) announcement it will start developing 10 new drugs by 2019.
Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Note:ALNY data by YCharts
1. Alnylam Pharmaceuticals (ALNY - Get Report )
Market Cap: $10.5 billion
Year-to-date return: 28.7%
Rating: Sell, D
Alnylam Pharmaceuticals, Inc., a biopharmaceutical company, discovers, develops, and commercializes novel therapeutics based on RNA interference.
TheStreet said: "We rate ALNYLAM PHARMACEUTICALS INC (ALNY) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its disappointing return on equity."
Business Modeling for Life Science and Biotech Companies: Creating Value and Competitive Advantage with the Milestone Bridge (Routledge Studies in Innovation, Organization and Technology)