NEW BULLISH Plays
Coherus Biosciences - CHRS - close: 37.18 change: +0.66
Stop Loss: 34.40
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on July -- at $---.--
Listed on July 20, 2015
Time Frame: Exit PRIOR to earnings in early August
Average Daily Volume = 327 thousand
New Positions: Yes, see below
Biotech stocks remain some of the best performers this year. The IBB biotech ETF is up +31% year to date. That compares to +10% for the NASDAQ composite and +3.4% for the S&P 500 index. CHRS is outperforming these indices and ETF by a wide margin with a +127.8% gain year to date.
CHRS is in the healthcare sector. According to the company,
"Coherus is a pure-play biosimilar platform company that develops and commercializes high-quality therapeutics for major regulated markets. Biosimilars are intended for use in place of existing, branded biologics to treat a range of chronic and often life-threatening diseases, with the potential to reduce costs and expand patient access. Composed of a team of proven industry veterans with world-class expertise in process science, analytical characterization, protein production and clinical-regulatory development, Coherus is positioned as a leader in the global biosimilar marketplace. Coherus is advancing three late-stage clinical products towards commercialization, CHS-1701 (pegfilgrastim biosimilar), CHS-0214 (etanercept biosimilar) and CHS-1420 (adalimumab biosimilar), as well as developing a robust pipeline of future products."
I see this as a simple momentum play in one of the market's best-performing industries. CHRS is up seven weeks in a row and is not showing any signs of slowing down. The $35.00 level was briefly overhead resistance but now it seems to be support. Traders were quick to buy the dip this morning near CHRS' rising 5-dma.
I consider this an aggressive, higher-risk trade. We're suggesting a trigger to launch bullish positions at $37.50. We'll try and limit our risk with a stop at $34.40. More conservative traders may want to use a higher stop loss. Just remember that biotech stocks carry an added risk. We never know when the wrong headline could send shares gapping lower. Of course the right headline could send it soaring.
FYI: Earnings should be coming up in early August and we'll plan on exiting prior to the announcement. CHRS does have options but the spreads were a little wide. If you're an option trader you may want to use them to limit your risk.
Trigger @ $37.50
- Suggested Positions -
Buy CHRS stock @ $37.50
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike