BofA has added a number of biotechnology stocks — a sector that is hot on Wall Street right now – to its list of top picks for the first quarter. The bank identified the biotech stocks, as well as some medical technology companies, as part of its thematic investing picks, on themes it says are related to a “transforming world.” BofA listed the stocks under themes such as ageing, obesity and pandemic. Under the pandemic theme, the bank referred to “disease X” — a term that has surfaced following Covid-19 referring to the next unknown pandemic that could hit the world – adding that there are stock opportunities across vaccines, testing, ventilators and work-from-home practices. The bank added biotech firm BioNTech , as well as medical equipment company ResMed , to its list under this theme. In ageing, BofA highlights the potential of the “silver economy” and says there’s $15 trillion baby boomer spending power in the U.S. alone, with opportunities across health care, aged care, and consumer sectors. The bank added medical technology firm Silk Road Medical , along with biotech firms Cerevel and Denali , to its list of stocks to play this theme. The issue of obesity also presents opportunities across pharmaceutical, healthy eating and wellness, according to BofA. The World Health Organisation puts the number of people worldwide who are overweight or obese at 1.9 billion. One of Bank of America’s new additions under this theme is medical equipment company ResMed . All of the stocks are buy-rated by BofA analysts. A bright spot amid the gloom? Wall Street is optimistic on biotechnology and pharmaceuticals heading into 2023 , even as the overall market appears uncertain amid recession fears. The Nasdaq Biotechnology Index lost 11% for 2022, compared to the Nasdaq which dived 33%, and the S & P 500 which sank nearly 20%. The NYSE Arca Pharmaceutical Index gained nearly 5% for the year. Morgan Stanley views biotechnology as an area full of opportunity heading into this year, while Citi says it’s a “stock-pickers market” in the sector , which is set to outperform even in a recession scenario. “Looking to 2023, we still see room for larger-cap biopharma to benefit broadly (at least early in the year) given the lingering recession concerns and attractive valuation vs. the broader market,” Barclays added in a late December note. — CNBC’s Michael Bloom contributed to this report.
