Must-Own Biotech Just Issued a New Buy Signal

by Sam Collins | November 22, 2013 2:25 am

Must-Own Biotech Just Issued a New Buy Signal

Gilead Sciences (GILD[1]) — This has been a favorite biotech stock of mine since I recommended it on Nov. 19[2], near $37. On Aug. 29[3], at just over $60, I reiterated my positive opinion of the stock, citing an increase in earnings estimates by S&P and saying, “New hepatitis C drugs and stabilization in market share for their leading HIV drug are expected to enhance future earnings, thus GILD should be high on the list of biotech stocks in investors’ portfolios.”

Then, on Sept. 19[4], I boosted my trading target from $67 to $72 for technical reasons.

After the close on Oct. 29, the company reported Q3 earnings of $0.52 versus analysts’ estimates of $0.48, and revenues of $2.78 billion versus an estimate of $2.72 billion. The next day, I said[5], “After a pop from the excellent earnings, the stock could retrace back to support at $66, which is the new buy under price. The trading target is raised to $80.

Hopefully, readers bought the stock when it traded as low as $65.53 on Nov 7, which was slightly above its 50-day moving average.

On Nov. 20, Citigroup (C[6]) reiterated a “buy” rating on GILD and raised its earnings estimate for fiscal 2014 by a nickel to $3.46 and its price target to $87 from $85.

Technically, GILD is in a powerful bull channel with support at its 50-day moving average and a line connecting the June and September highs and the November low — all at $66. MACD issued a new buy signal Thursday, and accumulation continues to build. My trading target is raised to $85; however, long-term investors should position GILD as a cornerstone biotechnology holding.

11 22 13 gild 300x195 Must Own Biotech Just Issued a New Buy Signal
Click to Enlarge

chart key 300x84 Must Own Biotech Just Issued a New Buy Signal[7]

Endnotes:
  1. GILD: http://studio-5.financialcontent.com/investplace/quote?Symbol=GILD
  2. on Nov. 19: http://investorplace.com/2012/11/trade-of-the-day-gilead-sciences-nasdaq-gild/
  3. On Aug. 29: http://investorplace.com/2013/08/trade-of-the-day-gilead-sciences-gild/
  4. on Sept. 19: http://investorplace.com/2013/09/trade-of-the-day-gilead-sciences-gild-2/
  5. I said: http://investorplace.com/2013/10/trade-day-gilead-sciences-gild/
  6. C: http://studio-5.financialcontent.com/investplace/quote?Symbol=C
  7. [Image]: http://investorplace.com/wp-content/uploads/2013/05/chart-key.gif

Source URL: http://investorplace.com/2013/11/trade-day-gilead-sciences-gild-2/
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