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A potential earnings short-squeeze play in the biotechnology and drugs complex is
Regeneron Pharmaceuticals(REGN - Get Report), which is set to release numbers on Wednesday before the market open. This fully integrated biopharmaceutical company discovers, invents, develops, manufactures and commercializes medicines for the treatment of serious medical conditions. Wall Street analysts, on average, expect Regeneron to report revenue of $349.43 million on earnings of 96 cents per share.
Just recently, Bank of America/Merrill Lynch said it expects Regeneron's Eylea sales growth to increase. The firm issued a buy rating on the stock and a $190 price target. Lazard Capital also recently said that companies most likely to beat third quarter top-line consensus expectations are
The current short interest as a percentage of the float for Regeneron Pharmaceuticals sits at 6.7%. That means that out of the 89.25 million shares in the tradable float, 4.99 million shares are sold short by the bears.
From a technical perspective, REGN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending very strong for the last four months, with shares soaring from a low of $107.31 to its recent high of $166.39 a share. During that uptrend, shares of REGN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed REGN within range of triggering a near-term breakout trade post-earnings.
If you're bullish on REGN, then I would wait until after its report and look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $166.39 a share with high volume. Look for volume on that move that tracks in at near or above its three-month average volume of 719,498 shares. If REGN triggers that breakout, then this stock will enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets are $175 to north of $180 a share.
I would avoid REGN or look for short-biased trades if after earnings it fails to trigger that breakout and then drops below its 50-day moving average of $148.77 a share with high volume. If we get that action, then REGN will setup to re-test or possibly take out its next major support levels at $142.13 to $141.84 a share.
Regeneron shows up on a list of
10 Companies That Prove Stock Picking Is Still Alive.