ImmunoGen, Inc. (NASDAQ:IMGN) shares have been on a tear in 2018, advancing more than 75% already this year. What's more, IMGN stock could have room to run, if recent history is any indicator. Meanwhile, fellow biotech Exelixis, Inc. (NASDAQ:EXEL) reports earnings next week, and EXEL stock's recent pullback to a key trendline could mean now is the time to jump on the longer-term uptrend.
IMGN stock appeared on our radar after sending up an options signal. Specifically, the security is one of the few stocks currently trading near a 52-week high, while simultaneously sporting relatively inexpensive near-term options. The stock's Schaeffer's Volatility Index (SVI) was at 130% yesterday, at the bottom of its annual range. Since 2008, this signal has flashed for IMGN only two other times, after which the equity went on to rally 17.78%, on average, over the next month!
As alluded to earlier, ImmunoGen stock has been on fire, more than quadrupling in just the past year. The security notched a two-year high of $12.05 on Wednesday, and was last seen trading at $11.28, up 3.9% on the day. Another 17.78% rally from current levels would place IMGN around $13.29 -- territory not charted since early 2016.
Despite the biotech stock's stellar advance, IMGN remains plagued by pessimism. The equity's Schaeffer's put/call open interest ratio (SOIR) of 2.11 is at the top of its annual range, suggesting near-term traders haven't been more put-biased in the past year. An unwinding of pessimism in the options pits could add fuel to the stock's fire.
Plus, short interest represents about a week's worth of buying power, at ImmunoGen stock's average daily trading volume, and 40% of covering analysts maintain tepid "hold" or "strong sell" opinions. A short squeeze or a flood of overdue upgrades could propel IMGN to new heights.
Biotech Exelixis -- which makes cancer treatment Cabometyx -- will report quarterly earnings after the close on Monday, Feb. 26. The stock jumped 5.3% the day after its November earnings report, and the recent pullback could be a buying opportunity, if past is prologue.
Specifically, EXEL stock is now within one standard deviation of its 80-day moving average, after a lengthy stretch above this trendline. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been 10 similar retreats to this trendline, after which EXEL shares rocketed 17.88% higher, on average, in the following month!
The stock was last seen 0.8% lower on the day, trading at $28.86. From a longer-term standpoint, Exelixis stock has been in a channel of higher highs and lows since early 2016, and has skyrocketed more than 700% in that time frame. Another 17.88% rally from current levels would place EXEL around $34 -- north of its mid-October 17-year high of $32.50.
Should the company once again report well-received earnings next week, a short-covering rally could be in store. Short interest represents nearly five days' worth of pent-up buying demand, at EXEL stock's average pace of trading.