27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Stock price performances within the pharmaceutical sector are being driven by "fear," and not fundamentals, according to Liav Abraham of Citi.
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In a report published Monday, Abraham commented that while there is "little that can be done" on the regulatory front to impose limitations on pharmaceutical and drug pricing, recent headlines and a subpoena received by Valeant Pharmaceuticals Intl Inc (NYSE: VRX) from the Democratic members of the House Committee on Oversight and Government Reform is "unhelpful" to investors sentiments.
Pricing
Abraham continued that despite what investors may have heard in the media as of late, drug prices on average rise 5 to 10 percent (net of rebates) annually. Furthermore, drug spending constitutes only 11–2 percent of overall U.S. healthcare spend.
"As drug pricing regulation is likely to require bipartisan support in Congress, we place a very low likelihood on implementation of any material reforms, however acknowledge that pricing is likely to come under increased scrutiny over the near to medium term, and egregious price increases on select specialty pharmaceutical drugs (such as Turing's Daraprim) are unlikely to be tolerated," Abraham wrote.
Where To Look
Finally, Abraham suggested that investors buy names with greater diversification and innovation that are not reliant on pricing as a sustainable driver of top-line growth. The analyst named Allergan and Teva Pharmaceutical as her top two "preferred names."
Shares of Allergan remain Buy rated with an unchanged $360 price target.
Shares of Teva Pharmaceutical remains Buy rated with an unchanged $86 price target.
Image Credit: Public Domain27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.