The biotech stock is sitting on a four-week advance, up 21% in April. That has moved it well up the right side of its first base this year, just ahead of its first-quarter earnings report.
The San Diego-based Halozyme revolves around its proprietary enzyme, rHuPH20, which improves the way a body absorbs injected drugs. Halozyme licenses the Enhanze drug delivery technology based on that enzyme, and also collaborates with partners to combine Enhanze with treatments and compounds.
That has led to partnerships with F. Hoffmann-La Roche (a unit of Roche Holding (RHHBY)), Johnson & Johnson‘s (JNJ) Janssen Biotech, AbbVie (ABBV), Eli Lilly (LLY) and Bristol Myers Squibb (BMY), as well as Alexion Pharmaceuticals (ALXN) and Horizon Therapeutics (HZNP).
One more reason that Halozyme is a stock to watch: After years of negative quarters, earnings turned positive with a 290% gain, to 19 cents a share, in the second quarter of 2020. Earnings rose 247% on an adjusted basis vs. year-ago levels in Q3 of 2020 and 308% in the fourth quarter, with corresponding revenue gains of 41% and 127%.
Stocks To Watch: Halozyme’s 900% Target
For Q1, analysts are projecting earnings will surge 900%, again on an adjusted basis, to 32 cents a share vs. a net loss of 4 cents. The company reports on May 10.
That performance helped boost Halozyme to a 91 Composite Rating from IBD. That’s not a perfect 99, but it still places the stock at No. 3 in the biotech industry group, just behind Horizon Therapeutics and Alexion Pharmaceuticals. That clearly marks it as a stock to watch, given that the industry group holds almost 700 biotech stocks.
Chartwise, Halozyme has built what IBD MarketSmith analysis pinpoints as a nine-week cup base. The operative buy point for now is 56.50, about 12% above where shares traded on Thursday. But Halozyme is now high enough in its base and has time to form a handle before its earnings release, flagging it as a stock to watch. That could significantly lower the buy point.
The stock’s relative strength line is behaving well, still below its January peak but scaling sharply higher. Halozyme’s Relative Strength Rating is a solid 83, indicating the stock is outperforming 83% of the names in IBD’s research universe.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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