Trade of the Day: Will This Orphan Drug Stock be at Home in Your Portfolio?

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BioMarin Pharmaceutical Inc. (BMRN) — This biotechnology company develops and commercializes pharmaceuticals for rare but serious diseases and medical conditions. These so-called “orphan drugs” meet unmet medical needs, and delays in the approval process by the FDA and other global regulatory agencies, as well as reimbursement issues, can negatively impact revenues.

Yet, S&P Capital IQ expect sales to rise 17.2% to $880 million this year, after jumping 37% in 2014, as a result of strong sales in two key drugs, Naglazyme and Kuvan, and the recent U.S. and European launch of Vimizim. Sales of Vimizim, which is now sold in 30 countries, rose to $54 million in the second quarter from $14 million in the year-ago quarter, and analysts expect sales to reach $220 million for the full year.

Capital IQ forecasts an earnings loss of $2.30 per share in 2015. But its analysts look for the BioMarin’s pipeline to garner favorable regulatory reviews and potentially attract M&A interest. Their 12-month target of $145 for BMRN stock is based on an analysis of the company’s drug programs and their future value.

This is a predominantly technical recommendation. In February, BMRN stock broke out at $105 from a narrow bull channel. This was followed by several rounds of very high-volume block purchases that could signify M&A activity. However, it must be noted that there has been little in the way of supporting activity since late June.

A bull market support line is currently at about $122, but support was recently observed when BMRN stock reversed from it 200-day moving average, now at $118.56.

This Trade of the Day is for speculators only. Buy BMRN stock under $125 with a short-term trading target of $150, which would result in a 20% gain. A stop-loss order should be entered at $116.

BMRN Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/biomarin-pharmaceutical-inc-bmrn-stock-trade-of-the-day/.

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