ImmunoGen Stock Pullback Could Be a Buying Opportunity

IMGN stock is trading near a historically bullish trendline

by Patrick Martin

Published on Apr 13, 2018 at 2:42 PM
Updated on Jun 24, 2020 at 10:16 AM

ImmunoGen, Inc. (NASDAQ:IMGN) is struggling today, down 2.3% to trade at $10.24. The biotech stock raced to a two-year high of $13.41 on March 26, but promptly pulled back in the past two weeks. If history is any guide, though, it could be time to bet on ImmunoGen's next leg higher.

Specifically, the shares have pulled back within one standard deviation of their ascending 80-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White, after the previous four times IMGN stock pulled back to this moving average after spending a significant amount of time above it, it averaged a whopping 21-day gain of 21.81%, and was higher three-quarters of the time. A move of similar magnitude this time around would put the stock back near multi-year highs.

Pullbacks IMGN

A short squeeze could provide more tailwinds for the equity. Short interest fell by nearly 19% in the most recent reporting period, but the 11.05 million shares sold short represent 12% of the IMGN's total available float.

Although IMGN has added 59% already in 2018, analysts have been hesitant to come aboard. Of the 10 brokerages covering the security, four still rate it a "hold" or "strong sell." A resumed climb higher in the next few weeks may prompt analysts to re-think their bearish stance.

Despite the biotech stock's recent uptrend, the security remains plagued by pessimism in the options pits, although volume has been light on an absolute basis. The equity's Schaeffer's put/call open interest ratio (SOIR) of 3.23 ranks in the 94th percentile of its annual range, suggesting near-term traders have rarely been more put-biased in the past year. An unwinding of pessimism in the options pits could add fuel to the stock's fire.


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