Sentiment is changing
aspen supplies medical products to more than 150 countries. With a market cap of R133bn, it has a strong market position as one of the largest pharmaceutical companies in the southern hemisphere. In mid-January, the company announced that its infant milk formula brand Alula had been registered by China’s Food and Drug Administration – an important milestone that paves the way for sales in the world’s biggest infant milk market.
Aspen’s results for the year ended 30 June 2018 were due on 13 September, after this issue of finweek went to print.
Outlook: After a long streak of upside from lows tested at 2 900c/share in 2008, Aspen pulled back as a correction from an all-time high at 44 870c/share in 2015. It has since struggled to fully regain those losses – as it continues to shrug off criticism for irregular price increases of generic drugs sold by them. Within its long-term corrective bear trend, Aspen has retained firm support at 23 360c/share, which means sentiment is changing – investors are seeing a good entry point.
On the charts: Aspen is headed to the resistance trendline of its bear trend and the three-week relativestrength index (RSI) is testing its own resistance trendline. Rumours that the company is considering a partner for its infant milk formula business bode well for investors.
Go long: Aspen would end its bear trend above 32 750c/ share – presenting a good buying opportunity – with upside potential to 44 870c/share. Positions could be increased above 39 100c/share.
Go short: If both Aspen and the three-month RSI reverse below their respective trendlines, sellers could drag the share price back to key support at 23 360c/share – breaching that level could trigger a sharp drop to the support trendline of its primary bull trend.