Earnings reports are a cornerstone of fundamentals-based research for stock market investors and traders. This is true across all economic sectors, and today we’ll apply this concept to companies in the pharmaceutical industry and their big stock charts.
Don’t get the wrong idea. One good earnings report doesn’t mean that a company’s stock shares will necessarily go up. It’s important to examine the price action in addition to the fundamentals, and that’s where stock charts are helpful.
Today’s big stock charts will feature names in the pharmaceutical market that recently posted earnings and/or revenue data that beat expectations. Hopefully, the charts can guide us as we digest the good news and add it to our knowledge base as informed traders.
Bristol-Myers Squibb (BMY)
Owners of Bristol-Myers Squibb (NYSE:BMY) stock were delighted to hear that the company recently beat Wall Street’s first-quarter earnings expectations. With revenue of $10.8 billion and non-GAAP diluted earnings per share of $1.72, Bristol-Myers Squibb unquestionably had an amazing quarter.
With the earnings report behind us, what does the future hold for BMY stock?
- Thursday’s candlestick for BMY stock looks big and red. However, it was really basically a flat day. The volume has been flat lately as well, so we can assert that the situation is neutral from that perspective.
- The BMY stock price is above the 20-, 50-, and 200-day moving averages, which is bullish. However, the price is not far above the 20-day moving average, so the bulls shouldn’t be complacent now.
- There is strong resistance at the $67.50 level as a double-top formation occurred there. So, that’s not a bad place to take profits.
Eli Lilly (LLY)
Much like Bristol-Myers Squibb, drugmaker Eli Lilly (NYSE:LLY) had an outstanding first quarter. The company posted quarterly of $5.9 billion, signifying a 15% increase compared to the same quarter of the previous year. Moreover, Eli Lilly reported quarterly net income of $1.5 billion, which is also impressive.
Have LLY stock traders priced these positive developments into the share price?
- Unlike with BMY stock, Thursday’s big red candlestick really does indicate a strongly bearish move for the day. The daily trading volume has been declining, though, so there might not be much conviction behind the selling.
- BMY stock is still above the 50- and 200-day moving averages. Yet, it is struggling with the 20-day moving average, so watch that line closely.
- The large broadening channel indicates that the price action is widening in both vertical directions. A breakout above the upper resistance line of the channel would be a major victory for the bulls.
Yet another drug manufacturer with an excellent first-quarter earnings result is GlaxoSmithKline (NYSE:GSK). Quarterly core earnings of $0.93 per American depositary share blew the consensus estimate of $0.79 out of the water.
That’s all fine and good, but will the GSK stock chart provide us with any clues as to how we should trade it now?
- The rebound in GSK stock appears to be petering out lately. The bulls will need to prove that they’re not exhausted as otherwise the bears could regain control soon.
- There’s a serious battle going on around the three major moving averages on the GSK stock chart. Thursday’s candlestick is sitting right on top of the 20-day moving average. Moreover, it’s sandwiched between the 50- and 200-day moving averages. In time we’ll know whether the bulls or the bears will prevail here.
- We can see a very wide channel that’s slanting downwards. However, the GSK stock price is near the upper boundary of the channel and could be ready to break above it soon.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.