These Four Biotech Stocks Sparkle In IBD 50

Four biotech stocks are hovering near the top of the IBD 50 list of growth stocks, putting on a show of relative strength leadership in this hot industry group. One is near a buy point of a new base, while two others have raced beyond buy ranges in a matter of weeks.

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Dynavax Technologies (DVAX), Harmony Biosciences (HRMY), Siga Technologies (SIGA) and Sarepta Therapeutics (SRPT) all sat in or near the top half of the IBD 50 list Friday with Relative Strength Ratings ranging from 97 to 99.

The 802-stock biotech industry group ranks a lofty No. 4 out of Investor’s Business Daily’s 197 industry groups ranked by price performance in the last six months.

Harmony Biosciences, which makes treatments for rare neurological diseases, has formed a flat base with an entry of 57.23, according to MarketSmith pattern recognition. The biotech stock is about 10% below the buy point and testing support at its 50-day moving average. The new base comes hard on the heels of a 21% gain after a breakout from a cup-with-handle base on June 22.

Harmony’s Composite Rating matches its Relative Strength Rating at 97. One less-than-thrilling aspect of HRMY stock’s relative strength line is that while it touched a new high early in the current base, it’s now pulled away from that high mark.

Biotech Stock Rebounds From Losses

The Plymouth Meeting, Penn.-based company’s Earnings Per Share Rating of 80 is muted by a loss of $2.39 a share in 2019. But the company’s earnings have jumped an average 98.3% in the past three quarters, according to Stock Checkup. Harmony’s chief product is Wakix, which is used to treat narcolepsy. Net product revenue for Wakix jumped 45% to $107 million in Q2.

The stock, which came public in August 2020, trades an average of 555,900 shares a day, which is plenty liquid. Ownership by mutual funds has risen the past seven quarters and the number of funds owning the stock increased a bullish 10%, based on the fund’s latest reports.

Harmony is also on IBD’s IPO Leaders and Stock Spotlight lists.

Dynavax Consolidation

Dynavax, which makes vaccines, is in a long consolidation. It’s retaken first its 50-day line and then its 200-day line. And in the first week of August, its 50-day line bullishly crossed above its 200-day line. The biotech stock now sits 24% below its old high. With the stock now in the upper half of its consolidation, watch to see of it can form a handle to offer an earlier entry.

An alternative analysis shows Dynavax on Aug. 5 broke out above a 15.60 buy point of a deep cup-with-handle base. The buy range goes up to 16.38. With a 66% descent from peak to trough, it’s a deep base, which is more prone to failure.

On the plus side, Dynavax, which ranks No. 2 in the biotech group, has a perfect 99 Composite Rating and a near-perfect RS Rating of 98. That picture is marred by an EPS Rating of 77, which is tied to a loss of 81 cents a share in 2020. But rebounding results include a 988% jump in EPS and a 386% upswing in sales in Q2. Analysts predict a near doubling of EPS for all of 2022. Dynavax products include Heplisav-B, a vaccine to prevent hepatitis B.

Siga Rises On Monkeypox Link

Siga’s ascent after its breakout above a six-week consolidation’s buy point of 14.90 not only blasted through the buy zone. It’s up 68% from the entry, well beyond the 20% where investors should consider taking at least some profits. Siga makes a treatment for smallpox, which is being used to help treat monkeypox.

Sarepta Therpeutics, which develops treatments for rare diseases, has also flown through the buy zone of a breakout and touched a 20% profit-taking target. That helps explain its Relative Strength Rating of 97. Looking back to 2015, the company has posted nothing but annual losses, but sales have been rising at a 35% clip the past three years.

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