A stock I've written about numerous times here is Alexion Pharmaceuticals (ALXN). I have no sentimental attachment to it, nor do I particularly care what the "story" is. You could say that I'm not returning to the stock now, but that it's returning to me -- in the form of showing up again and again on my top-performing large-cap scans.
Alexion, which makes treatments for autoimmune disorders, transplant rejection conditions, cancer and various other ailments, is set to report its third quarter on Oct. 18 before the open. Wall Street has pegged earnings at $0.47 per share, up 27% from the year-earlier quarter.
Revenue is expected to come in at $293.19 million, a year-over-year gain of 31%. The company has notched double-digit revenue and earnings increases during every quarter of the past two years. Free cash flow per share has been on the rise since it moved into positive territory in 2008, and return on equity is solid at 27%.
Alexion beat earnings estimates in each of the past four quarters.
The company has market capitalization of about $21.5 billion, and the stock trades about 974,000 shares per day on average. That volume is a bit on the low side for the market cap, given that the stock has gained institutional owners as it has rallied higher.
As for the chart, the shares have gotten a bit frothy, although they pulled back this week along with the broader market. The stock rallied to an all-time high of $119.54 on Oct. 5. In this week's retreat, Alexion has gotten support just above its key 50-day moving average. The last time it dipped below that line for any extended time was in April, May and June. A consolidation of several weeks could be constructive at this point. Of course, next week's earnings report could serve as a catalyst for a price move in either direction.
Another good performer from the ranks of large-cap pharmaceuticals is Valeant (VRX). Valeant makes drugs to treat nervous system ailments and cardiovascular diseases.
The company's market cap is $17 billion. It trades nearly 1.7 million shares per day, on average.
Unlike Alexion, which has trended above its 10-week line for months, Valeant has traded in fits and starts. For months it hit resistance below $60, and was unable to gain enough traction for a bigger rally.
Th stock cleared that price hurdle last month, but quickly receded. On Friday, Valeant was holding 3% above its 50-day line, and about 8.5% below its Sept. 7 high of $61.11.
Volume has been trending lower recently amid consolidation in the stock That's not a bad sign; increased volume on a pullback could signal heavy selling, or churn -- active trading without upward price progress.
Valeant is scheduled to report its third quarter on Oct. 31 before the open. It is seen delivering a treat, not a trick, with per-share income estimated at $1.08 per share, a year-over-year increase of 64%.
As with Alexion, Valeant topped earnings views in each of the past four quarters.
Earlier this week, Stifel Nicolaus reiterated its Buy rating on Valeant, and upped its price target to $75 from $60.