Although the stock markets overall enjoyed a banner year in 2023 – the S&P 500 was up 24% – Valley-area stocks, with a few notable exceptions, had a far more modest year.
While the S&P 500 saw its large gain, a handful of companies carried much of that weight; L.A.-area companies, similarly, varied widely short of its all-stars. Some of those performers hail from the Valley and its neighbors.
Consistent with other tech firms, Glendale-based LegalZoom.com was among the top gainers in the county, with share prices up 46% at the end of 2023.
Biotech climbing
After a generally low-performing year, biotech began a comeback late in the year, with some companies erasing losses and gaining in price by the end.
Amgen Inc., the Thousand Oaks-based biopharmaceutical company, ended the year up more than 13%, largely on the heels of its acquisition of Horizon Therapeutics in September for $28 billion. Simulations Plus Inc., a biotech software firm in Lancaster, also had a good year, with prices up 23%.
Meanwhile, Westlake Village biopharmaceutical MannKind Corp. (down 31%), Thousand Oaks-based Atara Biotherapeutics Inc. (down 84%), Arcutis Biotherapeutics Inc. in Westlake Village (down 79%) and Pasadena-based Arrowhead Pharmaceuticals Inc. (down 25%) did not quite capitalize on the turnaround, but better days may lie ahead.
“Biotech, specifically the small- and mid-cap firms, had a pretty awful year up through October,” said Sahak Manuelian, managing director and head of equity trading for downtown-based Wedbush Securities. “We’ve seen a big surge in biotech for the last six weeks or so, so we’ve seen some perform better. Arrowhead benefited from that in December, although it had a pretty lackluster year, along with most of that group for the last 24 months quite frankly.”
Disney ekes gain
In a year full of public relations battles, Burbank’s stalwart Walt Disney Co. saw a 4.3% gain on the year – certainly not the loss its detractors have wished for.
“Nonetheless, an extreme laggard compared to what some of the other names in this space have done,” Manuelian said. “Bob Iger came back, and he’s had a tough task. I think he’s got to chop this up and make some sales of portions that are less profitable than others.”
On top of the familiar intellectual property, Disney’s brand has bloated over the past decade or so to include Marvel and 20th Century Studios. Additionally, the company also controls ESPN and Hulu, the latter of which it upped its stake in last year. Share prices have struggled periodically, which has prompted shareholder and activist investor Nelson Peltz into not one but two proxy challenges to land a seat on Disney’s board.
Tech a winner
Broadly, valuation gains for tech companies carried the bulk of stock market growth; gains by the so-called “Magnificent Seven” – Apple, Alphabet, Meta, Microsoft, Amazon, Nvidia and Tesla – were responsible for most of the S&P 500’s performance.
LegalZoom’s gains had it finish the year at $11.30 a share. Elsewhere in the county, Snap Inc. in Santa Monica was up 89% on the year, while Microsoft saw a significant gain after its $69 billion purchase of Activision Blizzard, also in Santa Monica.
“We saw a lot of resurgence among the tech world and I think Snap certainly benefited from that,” Manuelian said. “Snap I think falls into this trend where we saw a lot of these tech stocks that got so beaten up in 2022 really come back (last) year.”
Still, it was no guarantee of success in the tech world – Calabasas-based NetSol Technologies Inc., an automobile leasing software firm, was down 24%.
Semiconductors also win
Van Nuys-based semiconductor firm Trio-Tech International rode the wave of success in the industry last year, finishing out the year at $5.07 a share after rising by nearly 13%.
“Semis were up across the board last year,” Manuelian said. “They were a big winner last year, a lot of that on the chip bill introduced by the Biden administration.”
However, it was “quite the opposite” for Semtech Corp. in Camarillo, which saw its price fall by nearly 24% last year.
Other observations
Glendale-based Public Storage rescued its share price with its acquisition of Simply Self Storage. After the $2.2 billion purchase closed in October, prices climbed from their lowest point of the year and closed out at $305, nearly 14% up from the start of the year.
Construction was another success story last year, likely driven by growing political support for housing and infrastructure projects. Tutor Perini Corp., based in Sylmar, saw its price grow by nearly 21% last year.
“Inventory is really the whole storyline here,” said Rick Barragan, a market manager for the J.P. Morgan private bank in Los Angeles. “There’s so little inventory out there, so I think construction and building will continue.”
Moving forward
For this year, analysts are hoping that tailwinds formed near the end of last year will continue and further ease lingering concerns about the state of the U.S. economy. These follow a first half of the year that saw continuing inflation, which resulted in multiple interest rate hikes by the Federal Reserve. With cooling inflation and rates unchanged since June, that picture began to improve in the second half of 2023.
“For 2023, obviously with all of the Fed hikes, everybody was really caught off guard and we had a lot of clients who were lucky to be in (Treasury bills) and gain 5% on the year,” Barragan said.
“Going forward for 2024,” he continued, “I think there’s three key things that we’re really looking at that will help the market broadly. We certainly think inflation is fading. The consensus is that the Fed is going to start to cut rates. If we continue to have strong earnings and growth at the corporate levels, that’s another strong tailwind.”