Biotech ETFs XBI and IBB Get Buy Ratings, Small-Cap XBI Preferred

An analyst initiated Buy ratings on the SPDR S&P Biotech ETF and the iShares Biotechnology ETF, targeting the 2026-2027 cycle. XBI is the preferred pick over IBB for higher upside, the analyst said.

XBI tracks smaller biotechnology companies, while IBB holds larger-cap names. The analyst said small-cap biotech offers more room for gains from current levels. The sector has been under pressure from policy uncertainty and interest rate sensitivity. The analyst described the current valuation as a discount and an entry point for long-term investors.

The analyst, a lifescience investor focused on non-consensus long-short ideas, said the biotech sector's discount makes it attractive for a multi-year hold. The full thesis is available on Seeking Alpha.