Biotechnology concern Vertex Pharmaceuticals Incorporated (VRTX) has been a standout during the past year, joining some of its sector peers in notable annual returns, observes Lillian Currens, deputy editor at Schaeffer's Investment Research.
The security surged to a record high of $318.38 on Nov. 2, and while the subsequent weeks have proven to be a bit bumpy, VRTX has locked in several layers of support on the charts.
The $290 mark is a notable level for investors to watch, while a historically bullish trendline has also stepped in as an important area of support. In fact, the stock's pullback to this level late last week could mean even more record highs in the equity's near future.
A study from Schaeffer's Senior Quantitative Analyst Rocky White shows VRTX coming back within one standard deviation of its 40-day moving average.
Over the past three years, the stock has seen five similar instances on the charts. One month after these signals, Vertex stock was higher each time, averaging a 5.3% jump. A similar move from its current perch would put the equity at $326.27 — well above its early November peak.
A further shift in sentiment amongst options traders could push VRTX higher as well. Of the 20 in coverage, seven still say "hold." Plus, the 12-month consensus price target of $323.38 is a slim 4% premium to current levels.
Short-term options traders, meanwhile, have been more put-biased than usual. VRTX sports a Schaeffer's put/call open interest ratio (SOIR) of 0.84, which sits higher than 67% of readings from the past year.