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Dramatic Turnaround Ahead for AstraZeneca

08/19/2019 5:00 am EST

Focus: HEALTHCARE

Joe Duarte

Editor, Joe Duarte In the Money Options

Although the pickings are not as plentiful as they were in December and January, there are still areas of the market where choosy investors could find places to put their money, at least for now, suggests Dr. Joe Duarte, technical expert and editor of In the Money Options.

So, if you stay alert, patient, and hedge your bets while being precisely picky in what you own, you are more likely to pick winners in this market, unless the whole thing breaks down as it well could if the technicals don’t improve quickly.

It’s not always easy to find big winners in any single sector, much less in the current market. Yet, AstraZeneca (AZN), an old school pharmaceutical stock which has nowhere near the name recognition of some of its grossly underperforming peers.

AstraZeneca has been slowly building quite a cancer pipeline under the radar, especially in the area of difficult to treat advanced lung and prostate cancers. Moreover, the cancer drugs are starting to pay off, both in patient results, and on the firm's top and bottom lines.

In fact the company recently announced significant successes in late stage clinical trials for Tagrisso in lung cancer and Lynparza in late stage prostate cancer, which led to a chart breakout for the stock.

If these trials lead to FDA approvals, they will likely increase the company's already growing marketplace footprint for its oncology division which had $4 billion worth of sales in the first half of the company’s current fiscal year.

Indeed, AstraZeneca, who’s most recent glory days were in the 1980s and 1990s has been stealthily transforming into a biotech cancer powerhouse, while improving on its diabetes and cardiovascular franchises.

Meanwhile, the company is expecting big things, having signaled very positive guidance numbers for the second half of the year, powered by its new medicines along with rising pipeline expectations.

Furthermore, aside from a very positive and evolving story plus a great price chart, the internal technicals for the stock are very encouraging, as the stock is nearing a breakout of its On Balance Volume (OBV) just as its Accumulation Distribution (ADI) is starting to turn up.

These are both signs that money is moving into the shares. Moreover, as long as the stock can stay above $43 it has the potential to move the mid 50s over the next six months barring a general market meltdown.

Finally, the company just declared a $0.90 per share dividend. Overall, AstraZeneca is a dramatic turnaround story that I believe is in the early stages of a long-term advance.

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