Author: Raj Gupta

Raj Gupta is Director, Research Analyst. After joining the firm in 2002 as a research analyst, Raj was appointed senior equity analyst in 2006, and lead senior equity analyst in 2014—largely because of his ability to select outperforming stocks. He acts as an expert in the O’Neil Methodology and contributes to the direction of product and service line development. He recommends securities for addition to or removal from the U.S. Focus List, or USFL, and the associated alerts to clients. During his tenure, he was part of the leadership that developed the Global Focus List, which marked the firm’s successful expansion into international equity recommendations. He is also a lead on the IPO Rewind report and contributes to weekly summaries on the performance of the U.S. market. Much of his expertise is delivered as highly customized service to clients. RAj earned his Bachelor’s degree in Economics from the University of California, Santa Barbara. He began working at the firm directly out of college, driven by his passion for investing and stocks. An avid soccer player, he built and managed an adult league in the Los Angeles area, in which he still plays. He also enjoys international travel; he and his wife commit to at least one major adventure a year.

Illumina

Posted on by Raj Gupta

O’Neil Methodology

• The stock is breaking out of a seven-week consolidation and is actionable. We recommend adding to shares here as its A/D Rating of B remains strong despite lower volume over the last few sessions. Should the stock pull back, we will be looking for the top of the base (~$249) to hold. Support below that is the rising 21-DMA (~$235).
• The stock’s RS line hit a new YTD high last week before the stock broke out. RS Rating of 88. A/D Rating of B. U/D Volume 1.2.
• EPS Rank of 94. High Composite Rating of 95. Top SMR Rating of A.

Hong Kong Pharma

Posted on by Raj Gupta

Our Hong Kong-listed Pharmaceutical Focus List stocks have come under recent accumulation, and now four of our five ideas are actionable again. CSPC Pharma broke out from a seven-week consolidation, while 3SBio, Livzon Pharma, and Shanghai Fosun Pharma are all now building the right side of new bases. The fifth idea, Wuxi Biologics, jumped ~20% this week after issuing a 2017 profit alert and is now extended from an ideal pivot. We do caution that all five ideas will be reporting earnings within the next three weeks.

Earnings estimates for the MSCI Emerging Market Health Care Index have reached their highest level since 2010.
Consensus calls for strong double-digit growth in all five of our ideas over the next year. Current year consensus median
EPS and revenue growth for our five Focus List ideas stand at 29% and 31%, y/y, respectively. Next year’s consensus median
EPS and revenue growth stand at 27% and 28%, y/y, respectively.

Market View

Posted on by Raj Gupta

Market Overview

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to hold above the Febru-ary 14th follow-through day (FTD) with one distribution day each. A handful of leading ideas have been able to push into higher highs (PLNT, MB, TAL, OLLI, NOW, PSTG, RHT, GRUB, RNG, etc.), though most ideas continue to build the right side of new bases. Following our discipline, we continue to recommend a slow approach, gradually committing capital to actionable ideas as the Confirmed Uptrend remains intact.

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 74 ideas (four additions) gained 2% on average this week, outperforming the S&P 500 (0.5%) and the Nasdaq (1.4%).

By Sector

Since the February 14th FTD, Technology and Utility are leading, rising nearly 3% each. Most of the Utility move was made Friday after the sector jumped more than 2%. Within Technology, MB broke out on earnings this week, turning actionable. ON and CY also both regained their respective 50-DMAs. Conversely, Energy, Con-sumer Staple, and Retail are lagging since the FTD, all flat to down 1%. Within Energy, NEP, NBLX, and CDEV continue to lag, while FANG remains a leader, regaining its 50-DMA. Within Retail, WING pulled back to its 50-DMA post-earnings, while HD reversed lower off its 50-DMA and is now forming a new base.