Biotech stocks to watch this week and worth considering for your portfolio include Horizon Therapeutics. This large-cap growth stock is closing in on a potential breakout and serves as Monday's IBD 50 Stocks To Watch pick.
Ireland-based Horizon Therapeutics has been forming a double-bottom base with a 110.10 buy point, according to MarketSmith pattern recognition. An uptrend grew stronger in early March, when the company reported muscular earnings.
Horizon Therapeutics stock has been revitalized, with gains of over 18% in the past month. It was a move that reclaimed important moving averages, such as the 50-day line.
One risk is that the stock is setting up in a fifth-stage base, which is late stage. Ideally, you want to find stocks breaking out from earlier-stage bases for higher chances of success. The weekly MarketSmith chart, however, shows the base count has reset.
Shares now remain less than 2% away from the entry, while the relative strength line is nearing highs ahead of the breakout.
Biotech Stocks To Watch: Horizon Therapeutics
Horizon makes drugs to treat rare autoimmune and severe inflammatory diseases.
The stock checks several technical boxes. What's more, Horizon's fundamentals appear to be improving in recent quarters.
The company's recent reports show uneven growth but generally positive numbers. According to MarketSmith, earnings declined 93% in the first quarter of 2021, while revenue fell 4%. But in the quarters following, earnings grew 305%, 1% and 21% on a year-over-year basis.
The biotech stock carries a three-year annual growth rate of 25%, which meets the minimum for CAN SLIM stocks. Profit estimates for the biotech's earnings are for increases of 23% and 22% this year and next.
"2021 marked a year of tremendous growth for Horizon. We invested significantly in our research and development capabilities and talent, significantly expanded our pipeline, increased our manufacturing capacity to meet growing demand and achieved outstanding financial results," said CEO Tim Walbert.
"We continue to execute commercially and build on our momentum in R&D to develop new approaches for patients with rare, autoimmune and severe inflammatory diseases."
