(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Shares of Regeneron Pharmaceuticals, Inc. (REGN) have been hammered over the past year, falling by nearly 30 percent while the S&P 500 has risen about 12 percent. Now, the company's shell-shocked investors may get a bit of relief. Regeneron's stock may rise 13 percent over the coming weeks, according to a technical analysis.

Raised Profit Forecasts

The better prospects for the stock partly reflects improving fundamentals as analysts boost their earnings and revenue forecasts. The raised estimates come even as analysts have lowered the average price target of the stock. Regeneron produces treatments for everything from asthma to cancer to infectious diseases.

REGN Chart

REGN data by YCharts

Bullish Charts

Regeneron's stock appears to have broken out of a year-long downtrend that saw shares decline from an intraday high of nearly $543 in June of 2017 to a low of $281 in mid-May, a drop of almost 48 percent. The shares broke out in June and have risen by nearly 13 percent to its current price of approximately $347. Now, the shares are sitting just below a critical technical resistance level of $351. If the stock breaks above technical resistance, it may rise 13 percent higher to roughly $396. 

The stock has been steadily rising on greater trading volume, an indication that buyers are returning to the stock. The relative strength index has also been trending higher, a good sign.

 

 

Improving Outlook

The bullish signs are also seen in Regeneron's fundamentals. Analysts have been raising their revenue estimates for this year and next year. And earnings estimates for 2018 have also climbed substantially since the beginning of the year, rising by 11 percent, while estimates for 2019 have also jumped. Analysts now see the earnings climbing by nearly 15 percent this year, and 12 percent in 2019.

REGN EPS Estimates for Current Fiscal Year Chart

REGN EPS Estimates for Current Fiscal Year data by YCharts

Declining Targets

Despite the improving outlook, analysts have cut their average price target on the stock by 17 percent since the start of the year, from $450 to $373, still representing a gain of about 7.5 percent from the current stock price.

This means the greater bullishness in the technical charts may reflect a more positive business outlook. Should upcoming quarterly results prove better than expected, then the recent rally in the stock may be the beginning of something much bigger.

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 holdingsInformation 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. 

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