NEW YORK (TheStreet) -- In the chart above, J.P. Morgan biotech analysts Geoff Meacham and Cory Kasimov make another argument for why the biotech bull market should continue to run higher. Price-to-earnings multiples for large-cap biotech are on the rise, but that's okay because so earnings growth is also accelerating.
The sector's P/E expansion that began in early 2012 has gone almost parabolic in 2013. Take a look at the near-vertical slope of that blue line, with P/Es for stocks like Celgene (CELG) ,Gilead Sciences (GILD), Amgen (AMGN) and Biogen Idec (BIIB) approaching 20 and poised to move even higher into the second half of the year.
Is the biotech multiple expansion a concern? The J.P. Morgan team thinks not because the 2012-2015 compounded annual growth rate for biotech earnings is forecast to reach 18%. Right now, the projected 2015 P/E for large-cap biotech is 14-16x.It may be hard to believe, but revenue and earnings expectations for this year are still on the low side. Check out the slide on the next page.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV