Conclusion, Investment Implications, Strategy

United Therapeutics Corporation (UTHR) appears to be resuming its March advance following a 21% correction from the late June highs. A sustained rise above the $104.36 area would help confirm this and target a 20% rise to $127.79.  This is an Asbury Value idea.

Analysis and Rationale

United Therapeutics Corporation (UTHR), a biotechnology company, develops and commercializes products to address the unmet medical needs of patients with chronic and life-threatening diseases primarily in the United States and internationally.  The company has licensing and collaboration agreements with Medtronic, Inc. to develop and commercialize the implantable system for Remodulin; Caremark, L.L.C. to provide refills of implanted pumps at its infusion centers; DEKA Research & Development Corp. to develop a semi-disposable system for the subcutaneous delivery of Remodulin; MannKind Corporation to develop and license treprostinil inhalation powder, and Dreamboat and Cricket devices; Arena Pharmaceuticals, Inc. to develop ralinepag for the treatment of PAH; and Samumed LLC to develop LNG01. The company was founded in 1996 and is headquartered in Silver Spring, Maryland.

Chart 1 below plots UTHR daily since January, highlighting its current retest of major underlying support at its 200-day moving average following a 21% corrective decline from the Jun 25th high.  Not shown is that a number of market internals are starting to improve as UTHR has been testing this major support, currently at $104.36, over the past week.

A sustained rise above the $104.36 area would target a retest of $127.79.

Chart 1

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $101.52 area, a long entry price of $106.90 would provide a 1:3.9 risk/reward ratio (risking $1.00 to make $3.90) with an initial risk of 5.0%.

Table 1


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