The Elliott Wave principle has been serving us well ever since we started covering HZNP stock over six years ago, in September, 2016. First, it helped us avoid the halving of the stock by May, 2017, and positioned us for its subsequent 200% recovery. Then, in March, 2019, it led us to conclude that a lot more upside can be expected going forward. And finally, after another tripling to roughly $100 a share by February, 2021, it prepared us for the crash to ~$60 and the current rally to $105.18 so far. The stock’s development over these six years and the evolution of the count is given below.
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In September, 2016, there was a complete five-wave impulse in wave I on HZNP ‘s weekly logarithmic chart. This meant that once the three-wave correction in wave II was over, the bulls should return in wave III. By, March, 2019, wave II was long over at $9.45 a share and the bulls had already lifted the stock to the $28 mark.
An Impulse Pattern Ten Years in the Making
However, third waves always exceed the top of the corresponding first wave, so we thought the rally is just getting started. Less than two years later, HZNP was already hovering around the $100 mark. We were able to recognize a complete five-wave impulse in wave III, marked (1)-(2)-(3)-(4)-(5). Again, every impulse is followed by a correction. With that in mind, we wrote that “a decline to the $65 – $60 area” can be expected “before the bulls return for one last push in wave V.” The updated chart below shows how the situation unfolded.
We always advise readers not to try picking tops and bottoms and this chart shows precisely why. Wave (5) added another $30 a share before the bulls finally gave up. This, however, only changed the proportions between the waves, not the Elliott Wave count itself. When wave IV eventually did occur, it erased the entire wave (5) of III and then some. Overall, HZNP stock fell more than 50% in a simple (a)-(b)-(c) zigzag correction before finding support at $57.84 in September, 2022.
Over the past three and a half months, the stock has been surging again in what should be wave V. In late-November, Horizon Therapeutics confirmed it is in takeover talks with Amgen, J&J and Sanofi. This is another example of Elliott Wave analysis’ ability to put investors ahead of the news.
Another 50% Decline Likely if HZNP Takeover Talks Fall Through
Now, under normal circumstance wave V is supposed to exceed the top of III. We’ll not be surprised if HZNP climbs above $120 over the course of the negotiations. In the absence of a definitive acquisition agreement, however, this would be no reason for celebration.
Just like prior to waves II and IV, the completion of wave V would mean it is time for a major corrective decline. Corrections usually erase most or all of the fifth wave, which translates into a decline back to the $60 support area. In other words, HZNP shareholders should hope that a deal is reached with either Amgen or Sanofi or prepare to suffer another 50% selloff over the next couple of years.
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P.S.: On Monday, December 12th, 2022, Amgen agreed to acquire Horizon Therapeutics for $116.50 per share, marking the end of this phenomenal Elliott Wave story and averting the potential ~50% correction suggested by the pattern.
