Headquartered in Denmark and primarily traded on the Copenhagen exchange, Genmab is a biotech company focused on antibody technologies for novel treatments of cancer and other serious diseases. The stock, still down 43.5% from its late-2022 record high, has been rising for two months on optimism about the company’s blood-cancer drug Epkinly, which just succeeded in Phase 3 trials.
Two months are hardly a trend, however. With shares back to 2020 levels, the question is, can good results for patients translate into sustainably good returns for Genmab investors? The Elliott Wave chart below makes us skeptical.
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It allows us to put Genmab’s recent price swings into big picture context going back more than a decade. As visible, the 50% collapse from over DKK 3320 to under DKK 1160 was preceded by a textbook five-wave impulse. We’ve marked the pattern (1)-(2)-(3)-(4)-(5), where the five sub-waves of wave (3) are also on display. This means that the post-2022 sell-off is part of the natural three-wave correction, which follows every impulse.
Furthermore, its own five-wave structure, labeled 1-2-3-4-5, allows us to mark it as wave (a) of a simple (a)-(b)-(c) zigzag. If this count is correct, the recent recovery stands for wave (b). Wave ‘c’ of (b) can be expected to lift Genmab stock towards the resistance near DKK 2600, where a bearish reversal for the start of wave (c) should occur. Unfortunately for the bulls, downside targets near DKK 1000 would make sense once wave (c) gets underway.
In conclusion, the recent rise in Genmab stock should not be mistaken for the start of a new uptrend. Instead, it seems to be part of a bigger retracement, which is only halfway finished. The pre-2023 uptrend is unlikely to resume before the stock has fallen to the support area near DKK 1000 per share, which could take a few more years.
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