by Serge Berger | November 6, 2013 8:31 am
Biopharmaceutical company Regeneron Pharmaceuticals (REGN) reported third-quarter earnings before the start of trading Tuesday. Regeneron earnings came to $2 per share, which is much better than the roughly 90 cents to $1 expected by analysts, and trumped the $1.70 it earned in the year-ago period. Meanwhile, the REGN top line was 40% higher at $597 million.
Strong sales of its eye drug Eylea is partly credited for the surge in revenue and Regeneron even raised its sales outlook for the drug. Given the strong report, Deutsche Bank raised its price target on the stock to $375 from a previous $310.
Regeneron stock holders loved the news, too. REGN shares rallied a strong 7% plus to over $302 on the day. REGN also was the best performer in the S&P 500, as well as the Nasdaq-100.
Regeneron stock has been an unstoppable train for multiple years now as it continues to power higher and breaks out of multiweek and multimonth consolidation patterns.
Through this longer-term lens, one note of concern from a technical point of view is how far REGN is trading above its 200-day moving average. While not massively overextended past this moving average, it has now been nine months since Regeneron stock got anywhere close to this moving average. As mean-reversion applies to all stocks at some point, I do want to keep this in the back of my mind.
Beyond that, however, the momentum oscillators such as stochastics and the RSI have plenty of room to move higher, making REGN a better candidate to look at from the long side than trying to bet against its rise.
On the daily chart, Regeneron stock has lots of lateral support around the $280 area, which as recently as early September acted as resistance and now also roughly coincides with its rising 50-day simple moving average (yellow line). This area of support is also where REGN shares bounced from on Tuesday after the company’s earnings report.
Tuesday’s price action was particularly encouraging as REGN gapped higher at the open and closed the day near the upper end of its daily range, all of which came on a monstrous spike in volume. Regeneron stock closed the day right at a diagonal resistance line dating back to September … and if it overcomes this, REGN can easily move to fresh all-time highs in coming weeks.
Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the “Essence of Swing Trading” eBook by clicking here. At the time of publication, Berger had no positions in the securities mentioned.
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