Market Overview

Shaughnessy And Lahiri: This Biotech Micro-Cap Could Be Oversold

Share:
Shaughnessy And Lahiri: This Biotech Micro-Cap Could Be Oversold

Read more from the authors here.

2016 begins painful for biotech investors. The XBI (Nasdaq Biotech Index) is down about 20 percent in just two weeks. Since the peak in July last year the index has shed more than a third. Liquidation sales are taking place; people are exiting, or forced to exit, using market orders in the process.

This is interesting, if stocks are raining down for reasons that have nothing to do with the underlying business, even good stocks tend to get oversold. Some even severely oversold.
Take Medgenics (NYSE: MDGN) for example.

This is a cash-rich biotech company, boasting some fine drug candidates against rare diseases. With a proven record of strong insider buying and management execution, this stock is nicely set-up for strong gains.

Timing is everything of course, so the fierce sell-off in recent days offers a potential contrarian entry point. 

As the next chart shows, the $4 range is historically a proven bottom.

5yr.jpg

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted in: Biotech Long Ideas Technicals Trading Ideas General Best of Benzinga