Biogen (BIIB) shares are currently set to gap higher by 41% this morning due to earnings and positive news for its Alzheimer’s drug. A 40%+ gap on earnings is extremely rare, but we can find historical occurrences very easily using our Earnings Explorer tool. Seeing how prior stocks performed following big gaps up or down on earnings is one of the many useful ways to use our Earnings Explorer. Below are the results from a quick screen we ran that found all stocks reporting earnings since the start of 2017 that opened higher by at least 40% on the day. As shown, there have only been 12 occurrences, and the average gap up at the open for these 12 names was +65.27%.
After their initial massive gap higher, these 12 stocks averaged a decline of 5.75% from the open to the close of trading, so it appears that traders look to book some profits. However, the average is actually skewed by DCIX, which shows up twice on the list with back-to-back gaps up of 50%+ back in 2017. In July 2017, DCIX opened higher by 57% only to trade down 42% from the open to the close for a full-day decline of 9%. In November 2017, DCIX opened up 85% only to fall 32% from the open to the close. On its November 2017 report, at least DCIX still managed to close higher by 25% for the full day.
All in all, 7 of the 12 stocks that have gapped up 40%+ on earnings since 2017 have continued higher from the open to the close. One thing for sure is that BIIB would be the highest priced stock to gap up 40%+ on earnings since at least 2001 when our database begins. No stock above $200/share has gapped up even 30%+ following an earnings report. The only $100+ stocks to gap up 30%+ since 2001 are Netflix (NFLX) and First Solar (FSLR). Netflix opened higher by 39% following its January 2013 report (when it had closed at $103/share the prior day) and it gained another 2% from the open to the close that day. FSLR closed at $167/share on 11/7/07 and then gapped up 32% the next morning following earnings. That day FSLR continued higher by 1.5% from the open to the close to finish the day up 34.3%. Biogen (BIIB) closed yesterday at $223.51 and is currently trading between $305-$320 in the pre-market. Start using our Earnings Explorer tool now with a Bespoke Institutional membership. Click here to join and get your first 14 days free.