GILD: Mid/LT Propspects Good, Short Term Caution is Warranted
GILD stock has been correcting since April 23, amid a broader weakness in the Pharma/Biotech sector. The market stage is framed by yesterday’s earnings miss at Pfizer, today’s disappointment at Allergan, Biogen’s downgrade by Goldman, and the weakness of the big three biotech’s, Biogen, GILD, and Celgene. Furthermore GILD received notice from the Food and Drug Administration Monday, that it is withholding approval of two drugs intended to be used in their HIV treatment regimen. Stock technical’s are also under stress. RSI is declining, and the MACD is weakening. 36 insider sale transactions by CEO, CFO and other officers at prices averaging in the mid $ 40’s, and 0 buy transactions. One measure of investor expectation is to follow options. The preponderance of volume for May 18 put contracts is decisively below $ 47.50. The stock could test the $ 46.53 April low this week.
Yes, those 47.50 puts - the ones which were so predictive of the stock's future performance, because we all know how smart the people who play cheap options are - seem to have lost 2/3 of their remaining value today. If the earnings and guidance are strong this pm, they should vanish into oblivion.
ahh yes "One measure of investor expectation is to follow options. The preponderance of volume for May 18 put contracts is decisively below $ 47.50. The stock could test the $ 46.53 April low this week."
Some on this Message Board have taken understandable comfort in GILD's rebounding from the 20 day SMA. The stock @ $ 50.59 is now below the 20 day SMA. The reality is that GILD is a great company, with positive MID/LT stock prospects, but it is fighting significant near term headwinds, as evidenced by the broader correction in the Pharma/Biotech sector.
Well, of all the biotech stocks you could have chosen to short, today proved that you picked the wrong one. Should have tried ONXX, PCYC, or another of the earlier stage companies. However, if you have the temerity to hold your position until Friday, I will credit you with foolhardy courage.