One of several medical stocks on the IBD 50 list of growth stocks, drug giant AstraZeneca is trying to break out of a new base as the stock market struggles to remain in a confirmed uptrend.
The U.K.- based maker of a wide variety of treatments is forming a double-bottom base, according to MarketSmith chart analysis. Its drugs include a Covid vaccine and cancer drugs Tagrisso, Imfinzi and Lynparza. On Wednesday, the stock briefly poked above the base's buy point of 67.50, but didn't stay there. And on Thursday, AZN stock gapped moderately lower, though it did rally back to near the top of the day's range.
The base started when the stock peaked at 71.70 following a 14% gain from its previous breakout in March. That one was from a cup-with-handle base. From the April 8 peak, the drug stock corrected twice. First to its 200-day moving average and then under it in the second pullback. Between those two dips sits the middle part of the W pattern, marking the buy point.
Positive Sign For Drug Stock
Its relative strength line, which tracks a stock's progress against the S&P 500, is a positive sign. The line is in new-high ground. That and the fact that the drug stock is near a buy point earned it a Relative Strength Line Blue Dot.
Fundamentally, the stock has perked up. Earnings grew 57% and 16% in the fourth quarter of 2021 and first quarter of this year. That's after falling 7% and then rising only 6% in the two previous periods.
AstraZeneca will report Q2 earnings on July 29. Analysts estimate profit will soar 98% to 81 cents a share vs. 41 cents a year earlier. Full-year EPS is seen jumping 34% to $3.34 from $2.49.
With a Relative Strength Rating of 97, the company ranks No. 2 in its diversified medical industry group, according to IBD Stock Checkup. The group itself, which has six companies, ranks a strong No. 21 out of Investor's Business Daily's 197 industry groups. Stocks in groups that rank in the top 40 tend to have a performance edge over those in lower groups.
AstraZeneca is also a member of IBD's Global Leaders stock list.
Making Progress On Various Drugs
AstraZeneca continues to make progress in its drug pipeline. This week, the company said it and Daiichi Sankyo's Enhertu drug has been recommended for approval in the European Union as a monotherapy for the treatment of adult patients with unresectable or metastatic HER2-positive breast cancer who have received one or more prior anti-HER2-based regimens.
On Thursday it said in a news release that positive high-level results from late-stage trials showed that treatment with AstraZeneca's Imfinzi in combination with neoadjuvant chemotherapy before surgery demonstrated a statistically significant and meaningful improvement in some cases.
Specifically, the change was positive in the pathologic complete response (pCR) compared with neoadjuvant chemotherapy alone for patients with resectable non-small cell lung cancer.
