Genzyme: Hold Shares

Posted Dec 22nd 2009 3:00PM by Joseph Lazzaro
Filed under: Genzyme (GENZ)

I'm placing a hold on Genzyme Corp's (GENZ) shares, first recommended on June 19, 2009 at a price of $55.02. If you're tempted to Buy GENZ's recent dip, hold-off. Here's why.

Genzymes' fundamentals suggest brighter days are ahead: The First Call FY2009/FY2010 EPS estimates for GENZ are $2.25 to $3.54. However, the stock's technical indicators have deteriorated this autumn, and indicate otherwise: the stock again dipped below the key, 50-day moving average, and also fell below psychological support at $50. Further, GENZ's chart now represents a bear hug -- a bearish pattern, and the rule is: when the fundamentals and technicals conflict -- stand aside.

Genzyme's shares need to close above the $50 level for three consecutive days to reverse the bearish pattern. A rally off double-bottom support at/near $47 would not be enough to invalidate the bearish trend. Further, a sustained drop below $40 will result in a closed position. I'll re-evaluate Genzyme in January 2010, at which time the conflicting signals should be resolved.

Stock Analysis: Genzyme Corp. is a moderate-risk stock. If you've already purchased the company's shares, Hold them. If you haven't, Don't Buy shares at this time. Sell/Stop Loss if you bought shares in this company: $37.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

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