Freaking out over Biogen (BIIB)’s fall from grace? Here’s your trade. (July 27, 2015)
Not a bad day for Biogen ( NASDAQ:BIIB ) unless, of course, you bought last Thursday, you were hoping for more. The company just absolutely blew the doors off of their earnings in the wrong direction on Friday. A bad revenue number, even worse they kind of guided down. They got everybody’s expectations pumped up on some drug that suddenly, well, maybe it’s not that great, so you can see what happened to the stock.
Here’s the deal, I don’t think you have to be in a big hurry to buy this stock but I’m going to say it in a different way. From a technical standpoint there’s no compelling reason to buy this stock. It’s shown you no evidence today that the stock is moving higher; in fact it’s dashed the hopes of the bulls. In the morning it rallied up and then the rest of the day it sold off. Now, there were some bullish articles, the analyst for JP Morgan, and also Bernstein think that this has been overdone and the stock should be bought; and it was for about 30 minutes. But there is also some conjecture out there with this big sell-off, Biogen ( NASDAQ:BIIB ) is now a takeover candidate.
Now that may very well be, but I’m going to tell you this, if I’m a hedge fund trader, if I’m a hedge fund manager, and if I’m also kind of a scumbag, that’s just the kind of rumor that I’m going to try to get out there in the market so that I could dump some of my stock. With that said, you could get a takeover on this stock but frankly I just don’t know if a company is going to move that fast in a couple days. Here’s my suggestion for you, if you’re long the stock there’s no particular reason to sell it, just look at this, the low is 299.76. Lets do this, let’s put a bottom on this at 298.00. If you’re not long and you say, “Well I like this trade Dan,” okay, buy the stock. But it’s not like there’s some catalyst that’s going to cause it to open up at 250.00, that deal is already done.
But if the stock starts trading below like 298.00 then I think you want to just ditch that thing and say, “Okay, I’m out of here.” Look for a little bit of a relief rally here; I wouldn’t expect much unless there are some buyouts, something like that. It’s really one of those low-risk longs simply because you can define your risk really, really tight.
Free Chart