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Under $10 Biotech Could Be a Long-Term Buy

FDA approval for NPS Pharmaceuticals should lead to a significant advance


NPS Pharmaceuticals (NASDAQ:NPSP) — This small-cap biotech company is developing therapeutics for gastrointestinal and endocrine disorders, as well as neurological diseases.

On Nov. 9, Gattex reported a much smaller quarterly loss than the year-ago period — $3.3 million this year vs. $12.3 million last year — and revised its outlook. The company also highlighted an FDA advisory committee’s recommendation of Gattex, a treatment for short-bowel syndrome. S&P raised NPSP’s 12-month price target to $16.

The stock opened a gap and ran to over $11 from $9.50. Since then, it retreated to its 50-day moving average and intermediate uptrend line at $9. This closed the gap that was opened and establishes a base for the stock to move above resistance at $9.80.

A close over $9.80 should trigger a trade to $11. Long-term buyers should take positions now in anticipation of a more significant long-term advance.

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Trade of the Day Chart Key

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