Chart Predicts Top Biotech Is About to Break Out

by Sam Collins | January 15, 2014 1:06 am

Gilead Sciences (GILD[1]) — This has been a favorite biotech stock of mine since Nov. 19, 2012[2], when I recommended it 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.

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

In December, S&P repeated its “strong buy” rating and $94 price target following a sell-off it attributed to an unconfirmed Bloomberg report that Express Scripts (ESRX[5]) raised concerns over the price of Gilead’s recently approved hepatitis C drug, Sovaldi. Recently, S&P raised its earnings expectations to $1.89 per share for 2013 and $3.10 for 2014. It also raised its 12-month target price to $104.

Technically, GILD is still in a powerful bull channel with support at its 50-day moving average at $72. Resistance at $76 has been stubborn, but buying volume is eating into the overhead, and it is only a matter of time before GILD breaks to new highs. MACD is moving up from the bearish zone, predicting that a breakout is forthcoming.

Buy GILD at the market for a trade to $85. My 12-month target is $100.

GILD Chart
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Chart Key[6]

  1. GILD:
  2. since Nov. 19, 2012:
  3. On Aug. 29:
  4. C:
  5. ESRX:
  6. [Image]:

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