Fed rate cut + M&A increase, Morgan Stanley bullish on US biotech stocks

Morgan Stanley believes that the Fed rate cut and increased M&A activities will drive a rebound in US biotech stocks, outperforming the overall market. Morgan Stanley expects the Fed to cut rates for the first time in June and predicts a 20% to 30% upside potential for biotech stocks in the next 6 to 12 months. At the same time, Morgan Stanley estimates that by 2030, drugs with revenues of $182 billion in 2024 will lose patent protection, leading to M&A demand for large biopharmaceutical companies. Morgan Stanley believes that oncology and immunotherapy assets are the areas of greatest interest to potential acquirers. Furthermore, Morgan Stanley also believes that the entire biotech industry will continue to focus on companies valued at less than $5 billion