NEW BEARISH Plays
Warner Chilcott - WCRX - close: 25.69 change: +0.37 stop: 26.26
Warner Chilcott is a global specialty pharmaceutical company currently focused on the gastroenterology, women's healthcare, dermatology and urology segments of the North American and Western European pharmaceuticals markets. Since being spun out of Warner-Lambert in 1996, Warner Chilcott has evolved, through a series of acquisitions and divestitures, from a small seller of undifferentiated products to a fully integrated pharmaceutical company with a broad portfolio of leading branded products. The acquisition of The Procter & Gamble Company's global branded pharmaceuticals business on October 30, 2009 transformed Warner Chilcott into a global pharmaceuticals company with significant scale and geographic reach. Today, Warner Chilcott has an expanded sales force and infrastructure to better promote products in the U.S., major Western European and other markets, increased diversity of revenue sources, enhanced product development capabilities and a deeper product development pipeline.
(source: company press release or website)
Why We Like It:
Shares of WCRX have had a massive run from their 2009 lows under $10.00. Yet after months of gains the trend appears to have changed. After peaking in January the stock corrected down toward the $25.00 level. The oversold bounce in March reversed producing a lower high. Now the trend of lower highs is suggesting WCRX will breakdown under round-number, psychological support at the $25.00 level.
I am suggesting we use a trigger to open bearish positions at $24.80. If triggered our first target is $22.60. The 200-dma is nearing the $22.50 region and could offer technical support. Our second, more aggressive target is the $20.25 mark.
Trigger to open bearish positions @ 24.80
Suggested Position: SHORT WCRX stock at $24.80 (unopened)
BUY the April $25.00 PUT (WCRX 10P25.00) current ask $0.50
Entry on March xx at $xx.xx
Earnings Date 05/11/10 (unconfirmed)
Average Daily Volume: 1.5 million
Listed on March 29th, 2010