- Insider buying can be an encouraging signal for potential investors.
- Insiders were buying shares last week in the wake of earnings reports.
- Two big drugmakers saw sizable insider purchases in the past week.
Conventional wisdom says that insiders and 10% owners really only buy shares of a company for one reason -- they believe the stock price will rise and they want to profit from it. So insider buying can be an encouraging signal for potential investors, particularly with markets near all-time highs.
A director at Trinity Industries Inc (NYSE: TRN) indirectly purchased almost 659,000 shares of this Dallas-based company to end July. At prices ranging from $18.81 to $19.84 per share, that cost the director more than $12.68 million. Note also that an executive sold more than 2,000 shares back in May.
The transportation products and services provider posted its quarterly results before these transactions. The stock ended the past week at $19.50 per share, which is still within the director's purchase range. While the consensus target price was last seen at $27.33, the analysts do not recommend buying shares at this time.
Last week, an AbbVie Inc (NYSE: ABBV) director and an executive acquired 95,000 shares altogether of this pharmaceutical company. At prices ranging from $65.30 to $67.32 per share, those transactions totaled more than $6.30 million. Note also that more than 49,000 shares were purchased by insiders in the previous week.
AbbVie recently posted better than expected second-quarter results and raised its full-year guidance. The shares have pulled back since, more than the broader markets, and ended the past week trading at $65.35. The analysts' consensus target is $86.00, though the stock has traded as high as $100.23 in the past 52 weeks.
Bristol-Myers Squibb Co. (NYSE: BMY) also saw a director step up to the buy window. At an average price of $44.72 apiece, the 11,000 shares reportedly acquired last week totaled nearly $492,000. Note that another director bought 5,000 shares back in May, but at a price of more than $47 apiece.
This pharma giant also posted better than expected earnings and raised its fiscal year guidance. Shares ended the past week at $45.99, above the above-mentioned purchase price range. Note that the shares have traded as high as $63.69 in the past 52 weeks, though the analysts' consensus price target is just $54.50.
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