Horizon Pharma (NASDAQ:HZNP), headquartered in Dublin, Ireland, is a $4.7B biopharmaceutical company operating primarily in the United States. In July 2015, its stock was in the vicinity of $39.50. By May 2017, it was trading under $10 per share.
We first examined Horizon Pharma stock’s prospects in September 2016, when it was searching for direction near the $18 mark. Here is what we found.
According to our Elliott Wave analysis of HZNP’s weekly logarithmic chart, the rally from under $2 in March 2013 to $39.49 in July 2015 was a textbook five-wave impulse, labeled (1)-(2)-(3)-(4)-(5). This meant the following sharp selloff was probably part of a three-wave (a)-(b)-(c) correction, whose wave (c) down was still remaining.
No matter how good or bad the company’s fundamentals might have been, that wasn’t what we focused on two and a half years ago. The markets are not as rational as some people believe they are. Even the poorest company can go through the roof, and even the strongest can trade in the doldrums sometimes.
Ahead of Horizon Pharma ‘s Elliott Wave Rally
So instead of analyzing the company, we tried to understand the market’s attitude towards it. Back in September 2016, wave (c) was “about to take the stock back to the price area between $9 and $7” and complete the 5-3 wave cycle. The trend was then supposed to resume in the direction of the five-wave impulse. Instead of losing hope, we thought investors should take advantage of this low-risk buying opportunity.
Horizon Pharma climbed to $29.44 last week. The updated chart below visualizes its development since September 2016.
Wave (c) dragged the stock down to $9.45. The touted reason for the crash to single digits was the company’s disappointing Q1 2017 report which also included a lowered guidance for the full year. In reality, the stage was set for a plunge in wave (c) long ago.
And just when the outlook was the bleakest, the bulls took the wheel and never looked back. Less than two years later, those who had the courage to buy Horizon Pharma stock below $10 a share multiplied their money by three.
The stock is still below its 2015 high, so we think the bulls’ chances of reaching $40 are quite good. How far can they go past this psychological mark is anyone’s guess at this point.
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