Biotech Stock Could Be Headed Toward New Record Highs

The equity is already up over 173% this year

Digital Content Manager
Oct 13, 2020 at 3:34 PM
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The shares of Crispr Therapeutics (NASDAQ:CRSP) are up 0.8% to trade at $100.24 at last check. And while the pharmaceutical stock has cooled off from its all-time-high of $105.12 on Aug. 19, it has still built an impressive 173.3% lead year-to-date, with support from its 100-day moving average. And now, a historically bullish signal flashing on the charts could indicate even more upside for CRSP in the coming weeks.

Specifically, the stock's recent peak comes amid historically low implied volatility (IV), which has been a bullish combination for the equity in the past. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have only been two 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 the CRSP's current SVI of 67.2%, which sits at the 17th percentile of its 12-month range. Data shows that the stock averaged a return of 12.1% during those two occasions. From its current perch, a move of similar magnitude would put the equity just above the $112 mark, uncharted territory once more. 

CRSP 100 Day

The majority of analysts covering CRSP are already bullish, but there is still room for upgrades and price-target hikes going forward, which could push the stock even higher. Of the 15 in coverage, 11 sport a "buy" or better, while four call it a tepid "hold" or worse. Plus, the 12-month consensus price target of $96.20 is a 4.3% discount to current levels.

A short squeeze could create even more tailwinds for the security. Short interest is up 7.9% in the last two reporting periods, and the 4.81 million shares sold short make up 8.9% of Crispr Therapeutics stock's available float. In other words, it would take more than a week to buy back these bearish bets, at the security's average pace of trading. 

Traders looking to speculate on Crispr Therapeutics stock's next move should consider options. The equity's Schaeffer's Volatility Index (SVI) of 71% sits in the 20th percentile of its annual range, suggesting short-term options are pricing in relatively low volatility expectations. In other words, the stock's near-term options are attractively priced at the moment.

 

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