"Choice
is change."
-- Christina Nikolov
Getting Vaccinated
by
Christina Nikolov, Founder ChartWatchCentral
Stock/Ticker: Biogen Inc.(BGEN)
Date: March 31, 2003
Opinion: Bullish
Current Price: $29.96
Target Price: $37.80, then possibly $42.50 and $56.02
Commentary:
Biogen Inc. (BGEN) fell 36% over the past four months and 77% in just over three years. Looking at those dismal results, it's hard to believe that prior to the most recent pullback, BGEN enjoyed seven straight weeks of rising prices, resulting in an overall gain of 64%. (chart #1, #2)As BGEN approaches the lowest level in more than four years (chart #3), we think now is the time to consider a long position. Why? The stochastic oscillator is oversold on a daily and weekly basis, with the monthly figure not far behind. Meanwhile, the shares are in the process of testing potential double bottom support at $28.71.
Full-year earnings for 2002, came in at $1.59 per share, beating Wall Street's average guess by two cents. And going forward, BGEN is projected to grow its bottom line by 6% in 2003, 13% in 2004 and 14% in 2005.
Based on our calculations, we project a surge to $37.80, with the potential for additional upside to $42.50. There is even a slight chance that the shares will jump as high as a downside gap created on March 07, 2002 at $56.02.
Keep a close eye on overhead resistance at the four month downtrend. That level has a good chance of halting a rally attempt, since it resides near other potential resistance levels, such as a downside gap created on February 20th at $37.80, as well as the 50 and 200-day moving averages. Chart #1 depicts the above-mentioned levels, and several others.
If you are looking to profit from a potential double bottom, we like the July 30 call (Symbol: BGQGF) at $3.30. And if you want to give the trade more time, consider the October 30 call (Symbol: BGQJF) at $4.40.
Note: We are concerned that Biogen has been showing signs of a potential bottom, even though the AMEX Biotech Index (.BTK) recently broke down from a wedge formation. (chart #4). Since close to 25% of wedge formations exhibit false breakouts in the direction opposite to the real move, there is a chance that the Biotech index will eventually follow BGEN and bottom as well.
Chart(s):
#1) Biogen Inc. (BGEN) - Thirteen Month Daily Chart
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#2) Biogen Inc. (BGEN) - Eight Month Daily Chart
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#3) Biogen Inc. (BGEN) - Forty Eight Month Weekly Chart
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#4) AMEX Biotech Index (BTK) - Forty Eight Month Weekly Chart
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