Amarin (NASDAQ:AMRN) was surging higher in November, rallying about 50% in just a few sessions. But as one can imagine, Amarin stock has been a bit volatile in the months since.
Coming into trading this morning, shares are down for 10 sessions of the last 11. The decline puts the stock at its lowest level since November, when shares began the aforementioned surge we just talked about.
So what now? Does support come into play and give bulls a much-needed boost? Or, will sellers drive Amarin stock lower and fill that gap from November, potentially triggering even more selling? Let’s look at the charts more closely.
Trading Amarin Stock
While the rest of the market has been in rally mode, Amarin stock has been struggling over the past few months. That much is clear, even with just a glance at the chart below.
Even though AMRN is at a multi-month low, it’s still holding the 200-day moving average and the 38.2% retracement for the one-year range at $18.56. Even if shares do crack lower, it gives traders an opportunity to fill the gap down to $18 and potentially rally from there.
Below $18 and it’s a different story. Breaking $18 could send AMRN stock lower, with little in the way of support. It could send shares all the way toward $16, where it will run into the 23.6% retracement at $16.77, as well as long-term uptrend support (blue line). That’s shown on the weekly chart below.
Should Amarin stock either hold the 200-day moving average or trade down to $18 and then rally higher, we need to know some upside levels, too.
On the upside, I want to see Amarin stock reclaim the 10-week moving average currently at $19.78, as well as the 50-day moving average currently near $20.90. Above that puts short-term resistance at $22 on the table, followed by long-term resistance of $23. Above the latter and $25-plus is possible.
So what’s the bottom line? Above the 200-day moving average and AMRN stock is still okay, technically speaking. Above the 50-day moving average and $22 to $23 is possible. Below $18 and investors have to be cognizant of more potential downside.
Bottom Line on AMRN
Even though AMRN stock has not been trading that well, investors must remember where it was. Just look at the weekly chart and you’ll see that, not even 18 months ago, this name was trading for $2 to $3. The fact that it’s digesting these large gains in such a controlled manner is promising in my view.
That said, short-term momentum is clearly not on its side at the moment. At least it has growth, though.
Estimates expect revenue to grow 84% for fiscal 2019, which has one quarter left to report. However, in January the company’s preliminary guidance called for revenue at or above the high end of management’s prior outlook, which was for sales of $410 million to $425 million. Even so, consensus estimates still call for full-year revenue of $422.5 million.
In any regard, it doesn’t matter if estimates are still short. What matters is the forward outlook. In the same announcement from above, the company said it expects $650 million to $700 million in full-year 2020 sales. Estimates now sit near $695 million, as investors very much expect AMRN to meet or exceed the high-end of its guidance.
Analysts expect the company to lose 10 cents a share in fiscal 2019, and for those losses to halve in fiscal 2020. A move toward profitability will be an obvious positive, but hitting on revenue growth will be the driver for Amarin stock.
Amarin’s got the growth, but it doesn’t have momentum right now. That’s not just because of the latest stock market swoon either. Bulls who are disciplined enough to cut AMRN if support gives way could nibble a position near current levels, and add to it if it’s able to regain more momentum.