Celgene Corporation (CELG) — In mid-October, I began featuring my picks for the most undervalued companies on the market. CELG stock was first on my list. At $84.67, it was down more than 12% from its September high.
The biopharmaceutical company is known for its outstanding management and product development. Specifically, Celgene develops small-molecule drugs for the treatment of solid-tumor and blood-borne cancers and inflammatory related diseases.
S&P Capital IQ recently reiterated its “strong buy” opinion on CELG stock with a 12-month price target of $122. Its analysts raised their 2014 earnings per share (EPS) estimate by $0.05 to $3.69.
I maintain my “buy” rating on CELG stock, but shares have jumped more than 25% from my Oct. 15 recommendation. I would not attempt to chase this stock, which I noted in my last review on Nov. 3. There is a strong possibility that traders will get a better buying opportunity on a pullback.
On the chart, we see CELG stock quickly reversed up from its 200-day moving average at about $83 in mid-October. In just six sessions, shares broke through their 50-day moving average at $95 and pierced resistance at $96 as well. Now those moving averages have become support. First, we have the 50-day at $98, and then the 200-day at $85.
As I said, I am looking to buy CELG stock on a pullback, preferably under $103, with a trading target of $120. However, a close above the prior high at $108 would trigger a new buy signal. In that case, traders can discard any comments about a possible pullback.