Biotech Suggests Stock Market Could Add A Few Pounds

The stock market, it appears, is both hugely expensive and full of bargains.

Consider biotechnology stocks. According to a research report out Thursday from Bank of America Merrill Lynch, biotech stocks are the cheapest they have been since at least 1992, as far back as their data goes. The P/E ratio of biotech stocks, based the estimate of what this year’s earnings will be, is 14, according to the report.

That’s more than 20 percent lower than the forward P/E of all the stocks in the S&P 500, which is approaching 18. Typically, biotech stocks trade at a 40 percent premium to the market, so they are historically extremely cheap, relatively.
Source: FA Magazine

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