One of the things we do know about the stock market for 2019 is that this year is likely to be a year of pharma consolidation, with the big players looking to get over issue of generic competition, price wars and over-regulation.
The cost of developing new drugs is also so prohibitive that the large caps tend to let the minnows do all the dirty development work, and then take them over just as the apple is set to fall from the tree.
Consort Medical (CSRT) looks to be one such company in the frame with alleged private equity interest – possibly CVC, and / or a UK based rival. Certainly, after the hit the stock took from September to December shareholders will be looking for salvation of some kind. This could come as soon as the next couple of weeks.
Even without the merits of a story, it is interesting to note from the chart that the end of last month saw the stock price gap up through its 50 day moving average, one of the better technical signals and one that suggests a decent buying event. The fact that the shares have held this gap and the 50 day moving average at 866p suggests drip feed buying is continuing. This backs the idea the stock is on the M&A runway.
A decent price trigger for the doubters of the M&A angle here would be an end of day close for the stock above the September resistance line at 955p – today’s current high. We shall see.
By Zak Mir @ZaksTradersCafe
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