Neurocrine Biosciences Could Rise 20% From Here
There are reasons to be positive on this biotech stock.
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Neurocrine Biosciences NBIX was raised to a fundamental "overweight" (buy) at Wells Fargo WFC Wednesday with a price target of $170. Neurocrine develops treatments for neurological and endocrine-related diseases and disorders. It has a portfolio that includes FDA-approved treatments for "tardive dyskinesia, chorea associated with Huntington's disease, endometriosis and uterine fibroids and a robust pipeline."
When I looked at NBIX on April 16 I wrote that "Weakness in the broad market averages keeps me cautious about new purchases and adding to existing positions. If NBIX holds the $130 area in the weeks ahead we will have plenty of time to get long."
Let's check the charts again.
In the updated daily bar chart of NBIX, below, I can see that the shares gapped higher Tuesday after the company announced positive top-line data for its Phase 2 SAVITRI study. Prices closed higher but near the lows of the day so we may see some additional short-term price weakness. NBIX is now back above the 50-day moving average line. The slope of the 200-day line is positive and intersects down around $121.
Trading volume has been more active the past four months telling me that investor interest has increased. The On-Balance-Volume (OBV) line has been rising and tells me that buyers of NBIX are more aggressive than sellers. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line but poised to cross to the upside for an outright buy signal.
In the weekly Japanese candlestick chart of NBIX, below, I see reasons to be positive on the stock. The shares trade above the rising 40-week moving average line.
The OBV line has been steady/sideways for the past four months. The MACD oscillator is still correcting to the downside. A weekly close above the $145 level should refresh the uptrend.
In this daily Point and Figure chart of NBIX, below, I can see Tuesday's rally with no price gap. The software is projecting an upside price target in the $169 area — very close to the $170 fundamental price target note above.
In this weekly Point and Figure chart of NBIX, below, I can see a price target in the $169 area.
Bottom-line strategy: Traders could use available price weakness to add to longs. Risk a close below $128. The $170 area is the price target for now.
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