Lannett Company, Inc. (LCI) shares briefly rose above their 200-day moving average to $10.00 per share after the company reported strong second quarter earnings, but shares quickly gave up ground into the latter half of Thursday's session.

Revenue rose 5.1% to $193.72 million, beating consensus estimates by $32.89 million, and non-GAAP earnings per share reached 86 cents, beating consensus estimates by 19 cents per share. Looking ahead to the full year, the company expects revenue of between $615 million and $635 million, which was higher than the previous guidance of $585 million to $615 million.

Last quarter, Lannett's stock rose more than 20% after better-than-expected first quarter financial results. The stock jumped again at the beginning of the year after Kare Schultz of Teva Pharmaceutical Industries Limited (TEVA) predicted stable prices in the new year after significant downward pressure in 2018 at the JPMorgan Healthcare Conference. The statement boosted many companies across the generics segment.

Technical chart showing the share price performance of Lannett Company, Inc. (LCI)
StockCharts.com

From a technical standpoint, the stock briefly broke out from the upper end of its price channel at the 200-day moving average at $9.22 before giving up ground. The relative strength index (RSI) moved into overbought territory with a reading of 73.01, while the moving average convergence divergence (MACD) remains neutral. These indicators suggest that the stock could see some near-term consolidation.

Traders should watch for a close above the price channel and 200-day moving average to signal a renewed trend higher. If the stock fails to break out, traders could see a move down to the pivot point at $6.88 as the price consolidates. If the stock does break out, traders should look for near-term resistance at R2 levels of $10.45. Closing the long-term gap from August of last year would involve a move to $13.00.

The author holds no position in the stock(s) mentioned except through passively managed index funds.