Today’s news: Alexion Pharmaceuticals (ALXN) reports positive clinical study results; share price surges 9% to 134.
Alexion Pharmaceuticals (ALXN) reported positive results in a Phase 3 clinical study of ALXN1210 this morning, for treatment of Paroxysmal Nocturnal Hemoglobinuria (PNH). You can read an extensive report of the results in the company’s press release, which also gives instructions on accessing this morning’s webcast with company management.
In the coming days, I expect Wall Street analysts to update their research reports on the company, including some rating upgrades and increases in earnings estimates and price targets.
As I’ve recently mentioned, ALXN is somewhat fairly valued based on 2018 earnings projections, but distinctly undervalued based on its more aggressive 2019 earnings growth outlook. (I’m very comfortable with that situation. I get more edgy when the situation is reversed, and current-year aggressive growth gives way to slow-growth expectations in the next year.)
I have every intention of keeping this stock, so the only subsequent question becomes, “How do I handle the share price for maximum value?” The stock traded as high as 147 in September 2017, so that’s our first line of price resistance. If you’re a trader, you’ll want to exit around 145. (Pigs get fat and hogs get slaughtered, right?) Biotech/pharma stocks are volatile, so I would expect a pullback within days of ALXN reaching price resistance. (For example, I personally sold some ALXN at 127 on March 12, and repurchased the stock under 121 on March 13.)
If you’re not a trader, that’s totally fine! Just expect ALXN to rest for a while when it reaches 145, and consider adding shares to your position on pullbacks. The stock should continue to do well, given the company’s very attractive longer-term outlook. I’m leaving the rating as a Strong Buy, but be aware that big share-price surges like we’re seeing today are often followed immediately by a down day. If you’re about to buy ALXN, you’ll probably get a better price tomorrow. Strong Buy.