A 2.78% percent loss this year for shares of Biogen Inc. (BIIB) was accompanied by overwhelming institutional selling, thus leading this stock to underperform. But now it looks like the tide may have shifted in favor of institutional buying.
When looking for the strongest candidates for long-term upside, it often pays to look at companies with a history of solid fundamentals and then take advantage of their recently struggling prices.
Biogen, a biotech company in a leading sector with a strengthening technical chart, makes a strong case for bullish investors. For MAP, the strongest indicator of positive price momentum is by measuring potential institutional accumulation. Last month we flagged a potential institutional buy signal in Biogen, which is notable since prior to that signal there were six potential institutional sell signals for the year. We want to see evidence that the tide may be turning in favor of institutional buying when looking for new bullish candidates. In the chart below, Biogen recently shifted away from overwhelming distribution, and may start to see increasing accumulation.
MAP’s process focuses on identifying companies with healthy fundamentals accompanied by outsized unusual institutional activity to try and measure potential accumulation/distribution at the single-stock level. By studying these data points we can hypothesize which equities institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest quality stocks.
Many of the best-performing stocks over the years have exhibited continual institutional support, telling a story of where big firms may see opportunity. A company, like Biogen, which resides in a strong sector, is growing its revenues and growing its earnings, which may keep institutions holding for years to come.
When deciding on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for Biogen being:
- Recent three-month closing highs achieved ($295.61 on July 26)
- Three-month outperformance vs. the overall market (+~17.3% vs S&P 500)
- Three-month outperformance vs. the sector (+~14.5% vs XLV)
- And most importantly, institutional support
Institutional investors are showing buying signals for Biogen stock. …read more
Read more here: Biogen Stock Is Ready for a Breakout