GW Pharmaceuticals plc (GWPH) shares soared nearly 15% in early trading on Wednesday after the company reported better-than-expected fourth quarter financial results. Revenue rose 67.5% to $6.7 million, beating consensus estimates by $1.35 million, and net losses came in at 20 cents per share, beating consensus estimates by three cents per share. Product sales reached $6.6 million, representing a nearly 200% increase over the prior year.
Analysts reacted favorably to the strong earnings. Piper Jaffray's Danielle Brill raised her price target from $180.00 to $185.00 and maintained an Overweight rating on GW Pharma stock. The analyst noted that the Epidiolex launch is off to a "very strong start" and gaining momentum, pointing out that the drug only launched in early November with two holiday weeks. Guggenheim analyst Yatin Suneja also recently initiated coverage on GW Pharma stock with a Buy rating and $178.00 price target.
From a technical standpoint, the stock broke out from an ascending triangle chart pattern to briefly hit R2 resistance at $175.56 near 52-week highs of $179.65. The relative strength index (RSI) moved into overbought territory with a reading of 77.60, but the moving average convergence divergence (MACD) experienced a renewed bullish crossover. These indicators suggest that the stock could see some near-term consolidation before continuing its intermediate trend higher.
Traders should watch for some consolidation below R2 resistance and 52-week highs and above R1 resistance and trendline support at around $155.00 over the coming sessions. After the RSI moderates, traders could see a renewed attempt to break through upper resistance to new highs. If the stock breaks down from support, traders could see a move lower to the pivot point and 50-day moving average near $130.00, although that scenario seems less likely to occur.
The author holds no position in the stock(s) mentioned except through passively managed index funds.