Rumor Could Give Traders Another Shot at a Top Biotech

by Sam Collins | December 11, 2013 1:36 am

Gilead Sciences (GILD[1]) — This has been a favorite biotech stock of mine since Nov. 19[2] near $37.50. On Aug. 29[3], at just over $60, I reiterated my positive opinion, 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.”

On Nov. 20, Citigroup (C[4]) reiterated its “buy” rating on GILD, increased its earnings estimate for fiscal 2014 by a nickel to $3.46, and upped its price target to $87 from $85.

Then, on Tuesday, S&P attributed the 3% dip in the stock to an unconfirmed Bloomberg report that Express Scripts (ESRX[5]) raised concerns over the price of Gilead’s recently approved hepatitis C drug Sovaldi. S&P repeated its “strong buy” on the stock and target price of $94.

Technically GILD is still in a powerful bull channel with support at its 50-day moving average at $66 and a line connecting the highs of July and September and the low of November. MACD is slightly bearish. That and the rumors noted above could provide an opportunity to buy this top biotech at a lower price. My trading target is raised to $90 and my buy under price is $70.

GILD Chart
Click to Enlarge

Chart Key[6]

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– Sam Collins, InvestorPlace Chief Technical Analyst

  1. GILD:
  2. since Nov. 19:
  3. On Aug. 29:
  4. C:
  5. ESRX:
  6. [Image]:
  7. Beat the Bell:

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