By Nigam Arora
Buyout Talks
Revolution Medicines (RVMD) was in talks to be acquired by Merck (MRK). The deal was valued around $30B. Apparently, Revolution Medicines wants a higher offer than Merck is willing to extend at this time.
In The Arora Report analysis, this indicates Revolution Medicines has enough confidence in its drug that it is willing to forego a great offer. Revolution Medicines is developing drugs that block a driver of cancer in pancreatic, lung, and colon cancer.
Buyout Target
Revolution Medicines still remains a buyout target.
Zones
The buy zone is $*** (To see the locked content, please take a 30 day free trial)- $*** to scale in.
The maximum recommended quantity is ***%, but reduce it based on personal risk preference.
The stop zone is $***- $*** to scale out. Note, stops may not protect you because the stock can gap down. The best defense is to control the quantity. Please see the Trade Management Guidelines section in the Real Time Feeds titled “First Line Of Risk Control.”
The target is difficult to determine at this time. If the drug works for multiple indications, the RVMD stock has the potential to quadruple. On the other hand, it is important to know that if there is disappointment, RVMD stock can lose 80% – 90% of its value.
Biotech Risk
Biotechs are inherently risky. Please read the “Speculative Position” section of the Trade Management Guidelines.
Profiting From Buyouts
To date, 224 Arora Portfolio companies have been bought out, producing large gains for members who routinely invest in buyout targets. This performance is better than the firms that charge $50,000 per year and provide buyout advice. With The Arora Report, you get so much more.
Signal Limited is a Signal(s) with a great record in similar situations but does not meet all of the stringent criteria for a Signal. Typically Signal Limited has higher risk-reward compared to a Signal over the short term.
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This post was just published on ZYX Buy Change Alert.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
