April 5, 2017

Q1 Share Price Performance in 2017 - Part 1

In order to assess share price performance among the Canadian public healthcare companies, I select companies at the beginning of each year which are categorized in two ways: share price to start the year and type of company.

  • The total number of companies which will be assessed on a quarterly basis has increased from 116 companies in 2016 to 122 companies to start 2017.
  • The share price categories have remained the same: $1.00 or more (Tier 1), $0.10 to $0.99 (Tier 2). The number of Tier 1 companies has decreased from 55 to 50 and the number of Tier 2 companies has increased from 61 to 72.
  • Some new companies will join the sector in 2017 but will not be included in the statistical analysis until 2018.
  • The share price performance of a group of 19 medical marijuana companies will be reported.
  • There are another 30 healthcare and medical marijuana companies with share prices below $0.10 to start 2017 which will be monitored but only major events will be mentioned.

The following table compares the number of companies in the various categories for 2014 through 2017. The largest group is the Therapeutics – Development category, with 42 companies in 2017, an increase of 11 companies from 2014.

Overall, Q1 2017 share price performance in the sector was positive for the 122 companies starting 2017 with share prices of $0.10 or higher.

  • Advancers outnumbered decliners by 69 to 53
  • Nineteen companies with share price increases of 40% or more
  • Seven companies had share price declines of 40% or more
  • The average and median share price changes were 11% and 3%, respectively

An investor should ask ‘how does the average share price change of +11% compare with some benchmarks in Q1?’

Performance of the four comparison benchmarks are shown in this table. The positive TSXV performance was driven by resource stocks and is a good indicator for small cap stocks, which includes most of the Canadian healthcare sector. Technology stocks drove the NASDAQ index higher and, in my opinion, dragged the biotech sector higher. There is no reason to expect any change in the volatility of biotechnology and healthcare share prices.

As major U.S. indices approach or set new all-time highs, discussion about valuation and market correction increases. If there is a market correction or major shift in asset allocation, the question which always arises is ‘where does the money go’ – bonds, cash, small cap stocks, or large caps which are perceived to be safer or better valuations.

In the next blog, I will asses the Q1 2017 share price performance of the Tier 1 Canadian healthcare companies.

[The author and his immediate family members may have long or short positions in the shares of some companies mentioned in or assessed during the preparation of this blog. Past share price performance may not be an indicator of future share price performance. This blog does not consider the investment objectives, financial situation or particular needs of any particular person. Investors should obtain professional advice based on their own individual circumstances before making an investment decision.]

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