PreMarket Prep Stock Of The Day: AstraZeneca

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

Investing in companies that are developing a vaccine for COVID-19 has been tricky. The price action in the PreMarket Prep Stock of the Day, AstraZeneca plc AZN, is no different. 

No Cure For Share Price: The price action in the leaders in the vaccine arena has been horrible since doses have become available to the U.S. public. For example, Pfizer Inc. PFE has tanked from its Dec. 9 high ($43.97) to the $37 area since its doses have delivered and are being administered en masse. 

Its partner in the successful trial is BioNTech SE BNTX. 

BioNTech peaked two days after Pfizer on Dec. 11 ($131) and has declined to the $90 area since the vaccine rollout began. 

Moderna Inc MRNA, which saw its vaccine approved Dec. 1, when it peaked at $178.50. The issue was changing hands at the $112 level at last check Monday. 

One Ugly Chart: The difference between AstraZeneca and these other three issues is that it peaked way back on July 20 at $64.94.  Over two trading sessions, in a very uncharacteristic fashion, the issue leaped from its July 16 close ($57.43) to its all-time high on the 20th, before retreating to end that session at $61.10.

The company and its partner Oxford University announced July 20 that the potential COVID-19 vaccine showed potent cellular and humoral immunogenicity in all of study participants. 

With no extremely positive development on the vaccine, along with other pharma companies making progress, the issue meandered its way down to a low of $49.79 on Oct. 30. 

Renewed Hope: Just after making that low, the news flow turned positive on the issue once again. 

The catalysts from Nov. 2-11, were on other drugs in AstraZeneca's pipeline to treat other diseases such as lupus, asthma and ovarian cancer. 

In addition, Wall Street analysts began to speculate that a successful vaccine from the company could add as much as $10 billion in revenue. 

The robust eight-day rally took the issue all the way to $58.08 on Nov. 11 before it resumed its downward movement.

Wall Street Diapproves Of Deal: The initial leg of the retreat took the issue to $51.44 on Nov. 27 but was showing signs of life when it rallied back to the $55 area in early December. 

On Dec. 14, the company announced the purchase of Alexion Pharmaceuticals ALXN for $39 billion in cash and stock at a 30%-plus price premium. 

On this occasion, the acquirer (AstraZeneca) swooned from $54.27 to $50.03 on Dec. 14. 

The move lower continued and the issue breached its former low of the decline ($49.79), falling to $48.17 on Thursday.

Sell The News: As is so common with issues that have fallen temporarily or permanently out of favor with Wall Street, they tend to sell off on unexpected rallies. This is evident in Monday's AstraZeneca price action. 

On Sunday, the company announced that its COVID-19 vaccine could receive U.K. approval as soon as Tuesday.

And before the open, the company announced that Lynparza had been approved in Japan for the treatment of advanced ovarian, prostate and pancreatic cancer. 

The good news instigated a much higher open ($50.23 vs. Thursday’close of $48.52), but the stock was only able to rally another nickel to $50.28 before reversing course.  

The stock was up 1.91% at $49.44 at the time of publication.