3 Big Pharma Stocks Under the Microscope: BMY, ABBV, LLY

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Pharmaceutical companies have been on the defensive lately, with fire coming from all directions.

3 Big Pharma Stocks Under the Microscope: BMY, ABBV, LLY

Drug pricing practices have become a key concern as the presidential campaign cycle ramps up, and it’s a fight that will take place on two fronts — both in the media and in the legislative branch of government.

If that were not enough to deal with, big pharma stocks also have to contend with activist investors at the gate demanding a breakup of the industry giants in an attempt to unlock value with the belief that the parts are greater than the whole.

Critics claim that the diversified model leads to muddled management as businesses with different growth rates and capital needs vie for resources.

With these themes in mind, we’ll use Profit Scanner, powered by Recognia, to look at three key players in the space to see if widespread concerns are beginning to take their toll on pharmaceutical stocks or if bullish activity is running counter to the narrative we’re being fed.

Big Pharma Stocks Under the Microscope: Bristol-Myers Squibb Co (BMY)

Big Pharma Stocks Under the Microscope: Bristol-Myers Squibb Co (BMY)Bristol-Myers Squibb Co (BMY) is “engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceutical products.” Its pharmaceutical products include chemically synthesized drugs and products that come from biological processes.

While the market has been kind to the stock over the past few months, there are signs of exhaustion, which is why BMY has stalled a bit over the past week or so.

In the chart above, we see that BMY has been in an established upward trend for the time horizon represented by the moving average period (21 bars). Moving averages are used to smooth out the volatility or “noise” in a price series, making it easier to discover the underlying trend.

By plotting the average price over the last several bars, the line is less “jerky” than plotting the actual prices. With the price of BMY recently crossing below the moving average, a bearish event triggered, meaning that we could see some additional downside movement with the stock in the weeks ahead.

Big Pharma Stocks Under the Microscope: AbbVie Inc (ABBV)

Big Pharma Stocks Under the Microscope: AbbVie Inc (ABBV) AbbVie Inc (ABBV) is a research-based biopharmaceutical company that develops and markets therapies addressing a range of diseases and conditions such as chronic autoimmune diseases, oncology, neurological disorders and other serious health conditions.

In the chart above, we see yet another break below the 21-day moving average, hinting that the recent selloff is more industry-related, as opposed to having anything to do with some kind of isolated “fundamental” deterioration from within the company itself.

Since May 11, there have been nine bearish short-term signals produced by Profit Scanner. And in that time, the stock has declined from $62.70 to $60.18 per share — a 4% move lower.

One likely reason why we haven’t seen the stock punished more is due to the fact that when a stock falls through an important moving average, there is likely a rebound back up to the underside of the moving average (now higher above) to measure the strength of the bearish signal. Should shares then decline and make lower price lows, we’ll know the initial move down was a valid trend-changer.

Big Pharma Stocks Under the Microscope: Eli Lilly and Co (LLY)

Big Pharma Stocks Under the Microscope: Eli Lilly and Co (LLY)Eli Lilly and Co (LLY) is engaged in the drug-manufacturing business, and it works to discover, develop, manufacture and market products in two key areas — human pharmaceutical and animal health products.

After a huge run throughout 2014 and much of 2015, LLY became a little winded. While the late March “bull run” did manage to break the longer-term slide, it’s difficult to gauge whether or not the April’s bullish follow-through was for real. What we do know so far in May is that the profit-takers are out in full force.

In the chart above, Profit Scanner shows us just how tricky it has been to maintain a firm grip on any upside momentum generated.

The signals provided over the past month or so have been dominated by the bears. Profit Scanner recently gave us a negative “momentum” event where price was found to be trading lower than it was in the 10 bars prior.

Momentum is significant because it signals the strength of price trends. A healthy price trend tends to exhibit strong momentum, but that’s just not the case with LLY at this point in time.

Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.


Article printed from InvestorPlace Media, https://investorplace.com/2016/05/big-pharma-stocks-bmy-abbv-lly/.

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