(Note: The author of this fundamental analysis is a financial writer and portfolio manager. He and his clients own shares of ALKS.)
Biotech stocks have put together a solid year as measured by the iShares Nasdaq Biotechnology ETF (IBB). The ETF is outperforming the broader S&P 500, rising by nearly 10% versus the S&P's rise of only 7%. Now the sector looks poised to increase even further, with some of the stocks within the sector rising by as much as 16%, based on technical analysis.
Shares of Alkermes PLC (ALKS), BeiGene Ltd. (BGNE) and Nektar Therapeutics Inc. (NKTR ), are three stocks in the ETF that could help to lead the way higher for the rest of the sector over the coming months. The three stocks are all well off their 2018 highs.
Alkermes has not had a good year, with shares down by more than 18%. The technical chart suggests that may be due to change. Shares have been rising along an uptrend since 2011 and have recently retested that support level in June of this year. However, shares have also been trending lower since 2016 when they peaked at roughly $80. Should the stock rise above the downtrend around $47.50, the stock could be on its way towards $52, an increase of 16%.
BeiGene is nearly 21% off its 2018 highs of nearly $220, but shares have found a strong level of technical support at roughly $154. The stock has been falling along a downtrend, which started in June when shares peaked. Should the stock be able to rise above that downtrend, then the shares may climb to roughly $189, an increase of about 11% from its current price around $171.25.
Nektar's stock has fallen the hardest, dropping by more than 41% from its highs in March. The charts suggest shares may recoup some of the losses over the coming months. The stock found a strong level of technical support around $46.75 and have risen above technical resistance of $62.15. The next level of resistance comes around $70, an increase of nearly 11%. However, should shares look to refill the gap created when the stock plunged in June and rise above resistance around $70, then shares could rise to nearly $83, a jump of nearly 30%.
These three stocks are certainly well off their 2018 highs, but they could be well on their way to at least recover some if not all of those all of those losses.
Michael Kramer is the founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.