Portfolio Manager Says Now Is A Great Time To Buy Biotech

Shares of one of the most tracked biotech exchange traded fund, iShares NASDAQ Biotechnology Index (ETF) (NASDAQ: IBB) dipped below its 200-day moving average on Tuesday for the first time in months. The ETF is also more than 10 percent removed from its 52-week highs, which has some investors nervous moving forward but some experts remain bullish for the longer term.

The Expert

Chad Morganlander, a portfolio manager at Washington Crossing Advisors, says investors should look to become overweight the biotech industry.

The Thesis

Biotech stocks are understandably showing weakness after some of the mega-cap names reported disappointing third quarter earnings reports, Morganlander said Tuesday afternoon on CNBC's "Trading Nation". Two of the most notable examples who reported disappointing top- and bottom-line numbers include Celgene Corporation (NASDAQ: CELG) and Gilead Sciences, Inc. (NASDAQ: GILD)

But the industry-wide decline creates a "window of opportunity" for investors to take advantage of weakened stocks, he said. The bullish outlook can be justified through a positive view of the health care space as a whole, but perhaps more important regulatory and government concerns will become a "passing issue."

Among the entire space, Amgen, Inc. (NASDAQ: AMGN) may be the most attractive as it's profitable, growing, and boasts minimal debt along with "a lot of cash," Morganlander said. Amgen is also a stock that's likely to experience less volatility over the coming years while also offering investors the possibility for above market returns.

Price Action

Shares of the Biotechnology Index ETF have lost more than 9 percent over the past month, but are higher by 15 percent since the start of 2017.

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