Editors' pick: Originally published March 24.
A small plurality of health care investors believes biotech stocks will outperform the broader market for the balance of 2016, according to a survey conducted this month by JPMorgan.
Forty-five percent of responders to the JPMorgan biotech buy-side survey predicted biotech outperformance for the rest of the year. Another 21% of investors expected biotech stocks to perform in-line while 34% predicted underperformance.
JP Morgan received 119 responses to its survey, of which 45% were managers of long-only funds. Thirteen percent of the responders were generalists while 87% were specialists in the health care sector.
Other findings from the survey include:
Changes in fund exposures (investment dollars moving out of biotech stocks) are largely responsible for the downturn in the sector so far this year.
Investors are looking for mergers and acquisitions activity to help turn the biotech sector around although expectations for an uptick in deals is decreasing.
Political pressure - criticism of drug pricing and uncertainty about the presidential election - remain a key area of risk for health care investors.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.