Pharma Stock Looks Poised for a Pre-Earnings Pop

The company will report earnings before the open on Wednesday, Nov. 3

Deputy Editor
Oct 18, 2021 at 11:56 AM
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It has been a rocky year for Amicus Therapeutics, Inc. (NASDAQ:FOLD), after the stock suffered a dramatic bear gap back in February that it hasn't even come close to recovering from. In recent months, the equity has come up against pressure at the $12 mark, which has kept it at a 52.4% deficit for the year. FOLD is down 1.4% at $10.92 at last check, and has just pulled back to a historically bullish trendline that could have the equity making another attempt at the aforementioned $12 level. 

The trendline in question is FOLD's 40-day moving average. Data from Schaeffer's Senior Quantitative Analyst Rocky White shows the equity coming within one standard deviation of this moving average after some time above it. Similar moves have occurred seven other times in the past three years. One month after each of these signals, Amicus Therapeutics stock was higher 50% of the time, averaging a 5.2% return during that time frame. A similar move from the stock's current perch would put FOLD at $11.48, back within striking distance of that $12 ceiling. 

fold oct 18th

Amicus Therapeutics is only a couple weeks away from its earnings call, which is due out before the open on Wednesday, Nov. 3. Looking back at its last eight reports, the equity hasn't made any outsized post-earnings moves, averaging a next-day swing of just 3%, regardless of direction. Over these past eight reports, FOLD saw positive next-day returns 37.5% of the time 

Short interest, meanwhile, has been on the decline, dropping 3.7% in the last two reporting periods. The 26.88 million shares sold short still make up 11.1% of the stock's available float, however, and it would take over 13 days to buy back these bearish bets, at FOLD's average daily pace of trading. Should short interest continue to unwind, the shares could surge higher still.

Analysts are split on the equity. Of the 11 in coverage, six say "strong buy," and five say "hold." Meanwhile, the 12-month consensus price target of $16.89 is a 54.4% premium to current levels. 

Now looks like an advantageous time to speculate on FOLD's next move with options. The security's Schaeffer's Volatility Index (SVI) of 51% stands higher than just 4% of readings from the past 12 months. This means options traders are pricing in relatively low volatility expectations at the moment. 

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