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Trade of the Day: Celgene Corporation (CELG) Stock Ready for Another Leg Up

Celgene has been outperforming with three of its four drugs lately


Celgene Corporation (NASDAQ:CELG) — This biotechnology company, which develops and markets small-molecule drugs for the treatment of cancers and inflammatory diseases, has been a high-growth favorite of mine: On Jan. 11 I focused on buying CELG at $122 with a target of $140, and before that, on Sept. 20, I suggested that it be bought at $107 with a target of $122.

Even in a rough pricing environment, Celgene seems to hold its own and then rewards those who patiently hold the stock.

Standard & Poor’s Capital IQ holds a similar view: On Jan. 26 they reiterated a five-star strong buy rating on CELG stock with a 12-month price target at $150. They project earnings of $7.15 for 2017, up from $2.49 in 2016, and another big increase in 2018 to $8.72.

These earnings increases are based on three of their four main drugs exceeding expectations in 2016. This should provide a robust pipeline of drugs in development for the treatment of multiple sclerosis, Crohn’s disease and other inflammatory conditions.

Technically, CELG completed a quadruple bottom when in November it gapped from the conjunction of its 50- and 200-day moving averages, briefly penetrating the resistance line at $122. In December, profit-taking resulted in a close of the break-away-gap. But after closing the gap, in January buyers emerged to challenge the line at $122 for the second time.

A third test of resistance, finally successful, occurred in late-February with an intraday high over $124, which resulted in a bullish flag (flags normally break in the opposite direction of their short-term closing prices). Both volume and momentum support a breakout with a target of at least $140.

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Trade of the Day: Celgene Corporation (CELG) Stock Ready for Another Leg Up

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