Monday, May 9, 2011

Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN) Q3 2011 Price Target

Recent price: 5.68$
P/E Ratio: -
3 Months Target Price: 7.50$

Company Description
According to Reuters, Achillion Pharmaceuticals, Inc., incorporated on August 17, 1998, is a biopharmaceutical company focused on the discovery, development and commercialization of treatments for infectious diseases. Within the anti-infective market, the Company focuses on the development of antivirals for the treatment of chronic hepatitis C and the development of antibacterials for the treatment of resistant bacterial infections. As of December 31, 2009, Achillion focused on developing three Hepatitis C virus (HCV) drug candidates in two classes: ACH-1625, a protease inhibitor for the treatment of chronic hepatitis C in phase Ib clinical testing; ACH-1095, a NS4A antagonist also for the treatment of chronic hepatitis C, which has been developed in collaboration with Gilead Sciences, Inc. (Gilead), in late stage preclinical testing, and ACH-2684, a high-potency protease inhibitor in preclinical testing. In addition, it has established a pipeline of certain other product candidates, for which it is seeking additional collaborative partners. These product candidates include ACH-702 for the treatment of serious bacterial infections and elvucitabine for the treatment of human immunodeficiency virus (HIV) infection.

Confidence Margins
Strong resistance $7.60 (+34%)
Light resistance $7.20 (+27%)
Light support $3.82 (-33%)
Strong support $3.00 (-47%)

Results for the first quarter of 2011 of Achillion Pharmaceutical proved to be been worse than analysts were expecting. Current prices provide a good entry point for investors and will yield satisfactory performance.

Entry strategy
For the cautious investor:
Buy the stock for 6$ or less. Keep this position on close watch as the light and strong supports are a long way down.

For the risk-taking trader:
The September 2011 7.50$ call option contract seems to be the right position to take as it offers a fair potential of profit, they can be acquired for about 75$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 7.50$, or keep it until 7.60$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 7.50$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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