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  • Vivus Rated Outperform by MIV Investments with $10 Target, Nears Blockbuster NDA 0 comments
    Dec 1, 2010 7:17 PM | about stocks: VVUS, ARNA, OREX, NTRI, MED

    Vivus, Inc. (NASDAQ:VVUS) is a company we really like here based on fundamentals, especially considering they have $158M cash on hand to see them through to their NDA for Qnexa (Obesity) and Avanafil, of which they paid $27M to acquire. We strongly believe it will outperform the broader market, and trump any major US indices. Competitors, Arena Pharma (NASDAQ:ARNA), whom may have to battle with Nasdaq share price compliance rules soon, and Orexigen (NASDAQ:OREX) saw their share prices tumble nearly 5% since open as speculation swirls their products are far behind Qnexa. A price target of $10 has been set for Vivus by MIV Investments Inc.

    The $150 billion dollar obesity market is largely open to upcoming competition, with NutriSystem (NASDAQ:NTRI) and Medifast (NYSE:MED) seemingly sharing the market.

    We will be preparing a more in-depth analysis in the coming days on Vivus, highlighting price targets, product market potential, revenues and much more.

    (click chart to enlarge)

    From a technical standpoint, it is rather simple to acknowledge the vast potential with limited downside for the share price. On the two year perspective, we are currently deadlocked in a wedge which seems to be nearing the breaking point. We are leaning towards an upward break of this pattern due to the fact that we have seen this pattern before during late 2009 into mid 2010, when the shares rose from $9 to $13.68 in a matter of two months.

    More interestingly is the fact that the bullish candles are repeating (as seen in the smaller wedge with blue circles) for the bigger, larger pattern.

    The bollinger bands are also tightening up which fores-cast a large move is coming in the near future, whether it be to the upside or downside.

    Shares currently lie under a very strong support which has held through the ups and downs for the last two years, thus offering very limited downside, and should calm investors risk appetites.

    MACD divergence is moving into positive territory and has engaged in a bullish cross, with the slow stochastics looking to follow suit. Another positive is the Relative Strenght Index (RSI) which helps interpret that the stock is rather oversold at current levels.

    With the recent bullish engulfing pattern (highlighted by the blue circle), it is easy to notice that tremendeous upside could follow in the short-term as seen in the previous instances.

    Strong resistance lies near the $8 mark, however, we expect this to be broken once we inch closer to the new drug application (NDA).

    Disclosure: Long VVUS, No other positions in stocks mentioned
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