The Wall Street Detective's Technical Snapshot by Joe Duarte
12/29/2000
Drug Stocks Ready To Burst Out Of The Gate
The drug sector has been slowly building up steam, and looks ready to accelerate its up trend. At the center is the increasing association between the traditional drug sector and the maturing biotechnology sector. As these two areas continue to increase their cooperation, much of the potential growth in biotech could spill over into the drug stocks.
Aventis (NYSE:AVE)
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Aventis has broken out to a new high, signaling that it is becoming a more serious player than many had given it credit for. The company resulted as a merger between Rhone Poulenc and Hoechst, and ran into trouble with its agricultural products division. But there is no mistaken the technicals here. The stock broke out on higher than average volume. MACD, money flow, and on balance volume are all positive.
The company is a giant in the pharmaceutical industry, and its weight in biotechnology may be starting to be felt. Aventis Behring, the protein design unit of Aventis Pharma has been given fast track status for its drug to treat an inherited form of emphysema by the FDA. Emphysema is a lung condition in which the lungs scar and the sufferer has difficulty breathing. It is most commonly caused by smoking, but it affects 100,000 people which inherit the condition as a result of a missing enzyme.
Teva Pharma (NNM:TEVA)
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TEVA is Israel's largest drug company. Best known for its strong position in the generic drug market, TEVA also has a strong biotech niche, through its association with Biotechnology General (NNM:BTGC). The two companies have signed an agreement to produce generic versions of biotechnology drugs. And this is where we think the pop in the stock could come. TEVA also sells chemicals to other drug makers, and has strong sales in its own generic line of drugs.
The stock is near a break out with resistance at 75-80. A rise above this area could take the stock to the 120-130 area in the intermediate term. Sales have grown at 36%, while net income grew at 20% over the last nine months. Both seem sustainable. The stock trades at a slight premium at 70 times earnings. But this premium suggests that the market is factoring in the biotechnology generic business and its potential growth.
American Home Products (NYSE:AHP)
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American Home Products is one of the best diversified drug companies in the world, and a great turn around play, as it emerges from the shadow of its weight loss drug litigation. The company is in a league with Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ). The stock has been basing for several months and is knocking on the door of a break out. If it can rise above the 65 area, it could make its way into the mid 80s.
This is a classic blue chip growth and value package, as it sells at 24 times earnings. Sales grew at a very sustainable 9%, while the company reversed a loss with a profit of over 2 billion dollars. Return on equity is an impressive 57%.
The stock is trading above its 50 day moving average. MACD, money flow, and on balance volume are very strong.
sicherlich nicht so aufregend wie techtitel.
gruß
proxi
12/29/2000
Drug Stocks Ready To Burst Out Of The Gate
The drug sector has been slowly building up steam, and looks ready to accelerate its up trend. At the center is the increasing association between the traditional drug sector and the maturing biotechnology sector. As these two areas continue to increase their cooperation, much of the potential growth in biotech could spill over into the drug stocks.
Aventis (NYSE:AVE)
Aventis has broken out to a new high, signaling that it is becoming a more serious player than many had given it credit for. The company resulted as a merger between Rhone Poulenc and Hoechst, and ran into trouble with its agricultural products division. But there is no mistaken the technicals here. The stock broke out on higher than average volume. MACD, money flow, and on balance volume are all positive.
The company is a giant in the pharmaceutical industry, and its weight in biotechnology may be starting to be felt. Aventis Behring, the protein design unit of Aventis Pharma has been given fast track status for its drug to treat an inherited form of emphysema by the FDA. Emphysema is a lung condition in which the lungs scar and the sufferer has difficulty breathing. It is most commonly caused by smoking, but it affects 100,000 people which inherit the condition as a result of a missing enzyme.
Teva Pharma (NNM:TEVA)
TEVA is Israel's largest drug company. Best known for its strong position in the generic drug market, TEVA also has a strong biotech niche, through its association with Biotechnology General (NNM:BTGC). The two companies have signed an agreement to produce generic versions of biotechnology drugs. And this is where we think the pop in the stock could come. TEVA also sells chemicals to other drug makers, and has strong sales in its own generic line of drugs.
The stock is near a break out with resistance at 75-80. A rise above this area could take the stock to the 120-130 area in the intermediate term. Sales have grown at 36%, while net income grew at 20% over the last nine months. Both seem sustainable. The stock trades at a slight premium at 70 times earnings. But this premium suggests that the market is factoring in the biotechnology generic business and its potential growth.
American Home Products (NYSE:AHP)
American Home Products is one of the best diversified drug companies in the world, and a great turn around play, as it emerges from the shadow of its weight loss drug litigation. The company is in a league with Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ). The stock has been basing for several months and is knocking on the door of a break out. If it can rise above the 65 area, it could make its way into the mid 80s.
This is a classic blue chip growth and value package, as it sells at 24 times earnings. Sales grew at a very sustainable 9%, while the company reversed a loss with a profit of over 2 billion dollars. Return on equity is an impressive 57%.
The stock is trading above its 50 day moving average. MACD, money flow, and on balance volume are very strong.
sicherlich nicht so aufregend wie techtitel.
gruß
proxi
