We initiate a long position with a target price of $35 (reward/risk ratio of 2.2:1). We recommend a stop-loss at $28.
Aspen is a global specialty and branded multinational pharmaceutical company with a presence in both emerging and developed markets. The company focuses on marketing and manufacturing a broad range of post-patent, branded medicines and domestic brands covering hospital and consumer markets through key business segments.
Aspen supplies products to more than 115 countries.
Technically, a developing symmetrical triangle pattern makes the share attractive as an investment opportunity (see the black converging trendlines as well as the insert on the main chart).
The pattern is formed by two converging trendlines, where the price creates a series of higher lows and lower highs, resulting in a triangle-like shape. A symmetrical triangle that appears in a previous uptrend is often considered a continuation pattern, suggesting that the prevailing uptrend is likely to resume.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R225. This classifies our profit target of R222 as realistic. We suggest a medium capital at-risk allocation to this trade.
Share Performance
Share Information
| Share code | APN |
|---|---|
| Industry | Pharmaceuticals, Biotechnology |
| Market Capital (ZAR) | 81.95 billion |
| One year total return | 29.21%% |
| Return year-to-date | 34.70% |
| Current price (ZAR) | 183.63 |
| 52 Week high (ZAR) | 189.99 |
| 52 Week low (ZAR) | 130.25 |
| Financial year end | June |
| Closing paragraph | The stock remains above its 200-day simple moving average. Year-to-date performance has been solid. Several technical indicators are supportive of a continued bullish trend. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 14.61 | 15.76 | 17.73 | 20.69 |
| Growth (%) | 7.84 | 12.48 | 16.73 | |
| Dividend Per Share (ZAR) | 0.00 | 2.97 | 3.44 | 4.07 |
| Growth (%) | - | 15.98 | 18.17 | |
| Forward PE (times) | 11.65 | 10.36 | 8.87 | |
| Forward Dividend Yield (%) | 1.62 | 1.87 | 2.21 | |
| Closing paragraph | Earnings are expected to improve significantly over the forecast horizon. The stock still appears cheap against its own history and relative to its peers on a forward PE basis. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view
| Share Name and position | BTI - Stop-loss (Close the position) | TFG - BUY (Continue to hold) | OMU - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 623.85 | 83.54 | 11.67 |
| Current | 595.00 | 96.80 | 12.53 |
| Movement | -4.6% | 15.9% | 7.4% |
| Summary text | The share reached our stop-loss level, and we closed the position. |
The stock continues to trade below its 200-day simple moving average. Upside momentum is supportive of the trade.
Our profit target is R132, with a trailing stop-loss of R78.40. Exit the trade around 8 July 2024. |
The price displays a potential reversal of a bearish trend. The share remains above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is R16, with a trailing stop-loss at R10.70. Exit the trade around 17 November 2023. |
| Share Name and position | ABG - BUY (Continue to hold) | INL - BUY (Continue to hold) | MTN - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 169.90 | 105 | 132.48 |
| Current | 178.04 | 108.41 | 134.76 |
| Movement | 4.8% | 3.2% | 1.7% |
| Summary text |
The price remains at the lower range of an ascending channel pattern which remains of interest. The share is trading just below its 200-day simple moving average, however, there are signals of potential upside price momentum, supporting our bullish outlook.
Our profit target is R195, with a trailing stop-loss at R168. Exit the trade around 9 October 2023. |
The price is noteworthy based on the RRG analysis, particularly due to its ability to stay above the 200-day simple moving average. In this case, fading downside price momentum supports the idea.
Our profit target is R121, with a trailing stop-loss at R102. Exit the trade around 7 August 2023. |
We continue to monitor the share price which suggests that the market may be entering stage 3 of the Elliot Wave pattern. The stock remains just above its 200-day simple moving average. Upside momentum supports the bullish bias.
Our profit target is R190, with a trailing stop-loss at R113. Exit the trade around 6 November 2023. |
