As of August 26, 2024, two healthcare stocks, Beigene Ltd (BGNE) and Halozyme Therapeutics (HALO), are flashing a warning sign for investors who rely heavily on momentum indicators in their trading decisions. The Relative Strength Index (RSI), a widely used momentum indicator, assesses the strength of a stock’s upward movement relative to its downward movement. This analysis can provide traders with insights into a stock’s potential short-term performance. An asset is generally considered overbought when its RSI surpasses 70, according to Benzinga Pro.
Beigene Ltd (BGNE)
Beigene reported better-than-expected second-quarter financial results on August 7, 2024. The company experienced a surge in global revenue and achieved positive non-GAAP operating income. John V. Oyler, Co-Founder, Chairman, and CEO of BeiGene, highlighted this as an “inflection point” for the company. Beigene’s stock price climbed approximately 19% over the past month and has reached a 52-week high of $219.64. However, its current RSI value of 72.54 suggests a potentially overbought condition. On Friday, Beigene’s stock closed at $193.82, down 0.9% for the day.
Halozyme Therapeutics, Inc. (HALO)
On August 6, 2024, Halozyme Therapeutics also announced better-than-expected second-quarter financial results. The company reported double-digit growth in royalty revenue, EBITDA, and earnings. Dr. Helen Torley, President and CEO of Halozyme, emphasized their continued progress towards achieving their full-year financial guidance. Halozyme expanded its reach into neurology and auto-immune disease treatment with recent approvals for its ENHANZE technology. The company’s stock price has gained approximately 12% over the past month and has reached a 52-week high of $62.86. With an RSI value of 76.12, Halozyme also falls into the overbought territory. On Friday, Halozyme’s stock closed at $62.72, up 1.8% for the day.
While both companies have experienced recent positive financial performance, their high RSI values may indicate a potential short-term price correction. Investors might consider adjusting their trading strategies to account for this possibility.
