Citi stays bullish on big-cap biotechs, bearish on small-/mid-caps

|By:, SA News Editor

Biotechs took a beating in the first three days of this week but they're rallying today, so investors need to decide whether they should be using the dip to buy or the bounce to sell.

Citi sees a mixed view for the sector: Given the scarcity of growth stocks in the overall market, the firm expects large-cap biotechs to bounce back but is far less sanguine about small- and mid-caps where valuations are broadly stretched and the Street is overly optimistic of the chances for pipeline success.

The firm's favorites include Gilead (GILD +4.7%) and Celgene (CELG +3.5%), and sees compelling risk/reward in Medivation (MDVN +3.9%) and Tesaro (TSRO +5.7%).

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