Bullish Signal Could Catapult Pharma Stock Higher

HZNP is up over 180% year-over-year

Digital Content Manager
Aug 10, 2020 at 2:57 PM
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The shares of Horizon Therapeutics PLC (NASDAQ: HZNPare up 1.6% to trade at $77.28 this afternoon, enjoying a 183.3% year-over-year lead, with support from the 20-day moving average. A $700 million proposed public offering of its ordinary shares helped the equity gap toward a record high of $78.93 last week, and more upside may be on the horizon. This peak comes amid historically low implied volatility (IV), which has been a bullish combination for HZNP in the past. 

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times in the past five years when the stock was trading within 2% of a 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower -- as is the case with HZNP's current SVI of 46.9%, which sits just above the 12th percentile of its 12-month range. The data shows that one month after these signals, the security was higher, averaging a one-month return of 8.4%. From its current perch, a move of similar magnitude would put HZNP above $83, at yet another record high.


Analysts are overwhelmingly optimistic toward Horizon Therapeutics stock, with all eight in coverage sporting a "buy" or better rating. Meanwhile, the stock's 12-month consensus target price of $93.20 is a hefty 21% premium to current levels.

That upbeat analyst sentiment is reflected in the options pits, too, where calls are preferred. In the past 50 days, 7,009 calls have been exchanged at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to only 514 puts. The resultant call/put volume ratio of 13.64 sits in the 98th percentile of its annual range, suggesting a healthier-than-usual appetite for bullish bets of late. 


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