by Serge Berger | February 12, 2014 8:04 am
Biopharma company Regeneron Pharmaceuticals (REGN) appeared to please traders, investors and analysts alike Tuesday, as its fourth-quarter earnings spurred a buying binge of REGN stock.
Regeneron earnings came to $2.24 per share, beating the consensus analyst estimate of $2.08. That came on revenues of $610 million for REGN, which beat Street estimates of $579.17 million. The year-over-year comparison on net income was somewhat difficult as a variety of tax-related benefits inflated the profit in the 2012 quarter. However, the earnings beat — along with a big increase in the company’s cash at the end of the year, from $588 million up to $1.08 billion — went over well with the crowd.
After the earnings report, a number of analysts added positive comments. Deutsche Bank, for one, said that it maintains a “buy” rating on REGN stock and and raised the price target from $375 to $410 — 26% above current prices.
REGN stock closed the day higher by 7.4%, and in intraday movement, Regeneron never looked back as traders seemingly blindly bid the stock higher. Of course, the broader market’s strength also helped to keep the stock afloat all day as the near-term negative catalysts seem to have passed. Regeneron shares closed Tuesday at new all-time highs.
Through the lens of the below multiyear chart, although REGN stock has exhibited an incredible run in recent years and thus also sports a somewhat concerning steep slope, it has managed to respect its 200-day simple moving average (red) exceedingly well. Put differently, despite the strong run, Regeneron routinely showed mean-reversion moves that took some of the near-term froth out of the stock and allowed trend followers and institutional types to leg into long positions.
On the daily time frame, Regeneron stock exhibited an incredible rally during the past few days — one that began with a bullish hammer candle on Feb. 5 when the broader market showed a similar development.
REGN now sits around 19% higher from last Wednesday’s intraday lows, and for now, I don’t view it as a high-probability long for the intermediate term. I respect the bullish action, but now would like to see REGN stock develop a higher base (i.e., consolidate around current levels and around the previous all-time high from last September/October).
If and when Regeneron can take a little breather here, we’ll see much better odds to buy REGN stock, and we could see shares move well into the mid- and even high $300s.
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Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the Essence of Swing Trading e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.
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