Monday, January 17, 2011

Clinical Data Inc. (NASDAQ: CLDA) Q1 Analysis

Recent price: 15.51$
P/E Ratio: -
3 month Target Price: 19$

Company Description
Clinical Data’s mission is to develop first-in-class and best-in-category therapeutics. The Company is advancing its late-stage drug candidates for central nervous system disorders and cardiovascular diseases, to be followed by promising molecules in other major therapeutic areas including asthma, diabetes, and neuropathic pain. Our late-stage compounds include: Vilazodone, which is currently under review for marketing approval by the FDA for the treatment of major depressive disorder (MDD); and Stedivaze™ (apadenoson), a potential best-in-class coronary artery vasodilator for pharmacologic stress testing, which is currently in Phase III trials ( ASPECT-1, Apadenoson Single Photo Emission Computed Tomography).

The Company's PGxHealth division applies its experience in biomarkers and drug development to generate potential first-in-class or best-in-class therapeutics

Confidence Margins
Strong resistance $21.48 (+38%)
Light resistance $19.23 (+24%)
Light support $13.31 (-14%)
Strong support $10.87 (-30%)

This stock is currently in an uptrend and is still close to the the bottom of it's trading range defined by its light resistance and light support. This makes for a great entry point.

Entry strategy
For the cautious investor:
Buy the stock for 16$ or less.

For the risk-taking trader:
The June 2011 17.50$ call option contract seems to be the most advantageous position, they can be acquired for about 380$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 19$, or keep it until 21$ if you are more bullish and think the is strength in the trend. It is strongly advised to get out of the position as soon as the stock price breaks under the light support since the next support line will incur major losses.

For the risk-taking trader:
The contracts should be kept until the underlying reaches 19$. Keep in mind that with a daily theta of -0.01, the value of the contract will decay as the maturity approaches. The investor must keep a look for any drop in the stock price that would cross the light support line as it will have a disproportionate affect the option prices.

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