NEW DIRECTIONAL CALL PLAYS
Gilead Sciences - GILD - close: 76.24 change: +2.16
Stop Loss: 73.45
Target(s): to be determined (potentially $85.00)
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below
Why We Like It:
GILD is in the healthcare sector. The company operates in the biotech industry. Shares of GILD have been a runaway success the last couple of years. Unfortunately the biotech sector was crushed with a -20% correction from its February highs to the April lows. It looks like the group is starting to recover.
GILD was not immune to the biotech industry pullback. Its own stock retreated -25% from its February high near $85.00. Investors are likely using the correction as an entry point. Wall Street loves this stock. Back in February when GILD reported earnings they beat estimates on both the top and bottom line and sparked a wave of new price targets in the $90-100 zone. When GILD reported earnings again on April 22nd they produced one of the biggest earnings beats in biotech history and just blew away analysts expectations. Now the stock is seeing new price targets above $110 or higher. A lot of analyst feel that GILD is still cheap compared to forward earnings.
Technically shares are rebound as well. The Point & Figure chart has produced a new triple-top breakout buy signal with an $85 target but that target could grow.
GILD was showing relative strength today with a +2.9% gain and a close above potential technical resistance at its 50-dma and the 100-dma. Yesterday's intraday high was $76.80. I am suggesting a trigger to buy calls at $77.00. If triggered our temporary target is $84.75. We'll re-evaluate our exit strategy as the trade progresses.
Trigger @ $77.00
- Suggested Positions -
Buy the Jun $80 call (GILD1421F80) current ask $1.91
Entry on April -- at $---.--
Average Daily Volume = 23 million
Listed on April 29, 2014