GILD's 160-day moving average has helped push the security higher twice in the past three years
The shares of Gilead Sciences, Inc. (NASDAQ: GILD) are up 0.6% at $74.08 this afternoon, enjoying a 13.8% year-to-date lead. The biotech, which rose earlier this month thanks to updates on its potential coronavirus treatment, is gearing up for its second-quarter earnings report, due out after the close on Thursday, July 30. And while GILD pulled back below its 20-day moving average ahead of the event, underlying support could give the stock a boost in the coming weeks.
Specifically, Gilead Sciences stock just came within one standard deviation of its 160-day moving average, after a lengthy period above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, two similar signals have occurred during the past three years. GILD enjoyed positive returns one month after each signal, averaging a 8.7% gain. A similar move from its current perch would put the equity just above the $80 level, which marks territory that has not been reached since early May.
Analysts were skeptical of the security coming into today, with 14 of 21 carrying a tepid "hold" or worse rating, compared to just seven "buy" or better ratings. Meanwhile, the stock's 12-month consensus target price of $55.62 is 10.1% premium to current levels.
In the options pits, however, it looks as if calls are outnumbering puts at a roughly six-to-one ratio. In the last 10 days, 39,990 calls were exchanged, as opposed to a mere 6,046 puts. In addition, GILD's Schaeffer's put/call open interest ratio (SOIR) of 0.4 stands higher than just 8% of readings from the past year, implying short-term options traders have been more call-biased than usual.
It looks like options players are pricing in more upside ahead of GILD's earnings event, too. So far today, 74,000 calls have been exchanged -- double the average intraday amount -- compared to just 6,443 puts. Most popular is the October 75 call, closely followed by the September 75 call, with new positions being opened at both.
Finally, a look at GILD's last eight post-earnings moves shows mostly negative returns, though the stock has averaged a fairly modest swing of 2.8%, regardless of direction. This time around options players are pricing in a slightly bigger move of 5.3%.