Medical stocks Idexx Laboratories (IDXX), Intuitive Surgical (ISRG), Exact Sciences (EXAS), Charles River Labs (CRL) and 10x Genomics (TXG) have all crossed early entries recently, at least intraday. But they range from Idexx stock breaking out of a traditional buy point to TXG stock having a wild, whipsaw reversal.
Early entries offer opportunities to start a position, perhaps with the intent to fill them out at the official buy point.
Idexx, which is on the IBD Long-Term Leader list, develops and manufactures diagnostics products and services for veterinary care and water microbiology. Pet ownership and care has exploded during the pandemic. Meanwhile, its Opti Medical Systems unit has Food and Drug Administration Emergency Use Authorization for a Covid-19 test kit.
In Q3 2019, Idexx earnings rose 36% to $1.24 a share with revenue rising 19% to $605.3 million, both accelerating from the prior quarter.
Idexx stock rose 6.4% to 485.52 last week. Just at Friday’s close, IDXX stock cleared the official buy point of 485.10 from a flat base, according to MarketSmith chart analysis. Shares already offered early entries. The first was crossing a downward-sloping trend line from the Nov. 9 high. The second was just above 469, as IDXX stock cleared the bulk of the pattern.
The Westbrook, Maine-based medical company ranks No. 1 in IBD’s Medical-Systems/Equipment group. Idexx stock has a Composite Rating of 98 out of a possible 99. Its EPS Rating is also a 98, while its RS Rating is 88. The relative strength line dipped in early November, followed a strong run after the coronavirus crash and more broadly for the past several years.
Intuitive Surgical Stock
Intuitive Surgical is known for its da Vinci robotic surgery systems. The Sunnyvale, Calif.-based company had big EPS and revenue declines the past two quarters as hospitals postponed elective surgeries due to Covid-19.
Intuitive’s fundamentals are under some pressure. Its Composite Rating is 75. IBD’s top stocks have a rating of 80 or higher. Intuitive’s EPS Rating is 65, while its RS Rating is 72. Its relative strength line is trending sideways.
But as Pfizer (PFE) and Moderna (MRNA) separately roll out vaccines, investors can look ahead to mid-2021 when most of the population is expected to be vaccinated. That raises the prospect of revival in Intuitive Surgical earnings.
Intuitive Surgical stock has an official buy point of 792.64 from a flat base. ISRG stock cleared an early entry of 781.99 on Friday from a handle-like formation. Shares rose 3.8% for the week to 789.09, a record close.
Exact Sciences Stock
The Madison, Wisconsin-based medical company develops molecular diagnostics for the early detection of colorectal cancer. Exact Sciences reversed from a downtrend recently on a promising new cancer diagnostic test. The diagnostic test helped breast cancer patients avoid needless chemotherapy.
Exact Sciences stock has an official buy point of 139.36 from a cup-with-handle base. The stock broke a short trend line within that handle Thursday, offering an early entry around 131. For the week, EXAS stock rose 5.8% to 137.05.
Exact Sciences stock has an RS Rating of 91 out of a possible 99. Its relative strength line surged in September and October and is holding steady.
Exact Sciences isn’t profitable yet. However, quarterly sales have grown by at least double digits for years. Most of its revenue comes from diagnostic testing for colon and breast cancer, as well as for Covid-19.
Zacks Investment analysts expect Exact Sciences to post a loss of 33 cents per share on $419 million in sales next quarter. Losses would widen year over year, but sales would jump 64%.
Charles River Labs Stock
Based in Wilmington, Mass., Charles River Labs provides preclinical medical services to pharma and biotech companies. It also services governmental agencies and academic institutions. It is the largest nonclinical contract research organization.
The company is a key player in the discovery, and early development and manufacture, of new drugs and therapies. But it suffered from the closures of many academic labs earlier in the year due to Covid.
Still, Charles River Labs’ earnings per share swelled 38% to $2.33 a share, with revenue up 11% to $743.3 million.
Charles River stock has an official buy point of 257.98 from a flat base. The stock flashed an early buy signal on Thursday when it bounced off its 50-day line and cleared short-term resistance. For the week, shares rose 5.4% to 248.97.
CRL stock has solid fundamentals with a 91 EPS Rating and an 81 RS Rating. Its Composite Rating is a 92.
10x Genomics is a life-science technology company known for making instruments and software for single-cell genomics analysis. On Oct. 5, it acquired Sweden-based Carta, which develops in situ RNA analysis technology. Pleasanton, Calif.-based 10x is not yet profitable, but it posted $71.8 million in revenue in the last quarter. 10X Genomics’ website states that “97 of the top 100 global research institutions and 19 of the top 20 global pharmaceutical companies” have adopted their products.
TXG stock has an RS Rating of 91 but a Composite Rating of only 51.
The company has strong sponsorship though, with several top mutual funds as investors.
TXG stock blasted past a 155.27 early entry and the official 157.58 cup-with-handle buy point on Friday morning to a high of 162.77, but then crashed to as low as 140.81 — with most of the decline coming in a single minute — before rebounding to finish up 1.1% at 152.90. The massive downside reversal and outsize day raise multiple concerns, even if the closing price showed a gain.
On a weekly chart, TXG stock looks better, up 3.35% and closing in the upper half of its range.
Arguably, the prior buy points are not valid anymore, though it’ll be interesting to see how TXG stock reacts. A strong, high-volume move above the old buy point might attract investors. Perhaps what would be better is if TXG stock forms a new handle closer to Friday’s high, offering a safer entry.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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