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CNA Finance is a leading finance and investing website that offers content from contributors around the world. Focusing heavily on stock market commentary, market analysis, and investing tips; it's a great place to find articles about all things finance! Joshua’s likes to discuss where assets will move in the market, what reports may be coming out and what to expect, economic conditions and more.

Synergy Pharmaceuticals Inc (SGYP): Another Breakout Is Close


Synergy Pharmaceuticals Inc  (NASDAQ:SGYP) has been trading relatively flat in the market recently; that is, until yesterday’s massive gains. After billionaire John Paulson’s hedge fund disclosed that it had taken a more than 2% stake in the company after hours on Friday, SGYP closed with massive gains yesterday. Now, the big questions surrounding the stock are, “Will another breakout happen any time soon?” and “How long will SGYP gains last?” Here’s my take on it…

Yes, SGYP Is Likely To Breakout Again Soon

First off, speaking from a purely technical standpoint, it does look like SGYP is likely to see breakout activity again some time soon. Looking at the stock chart to the left, we see a very clear patter that depicts a flag. Essentially, when we see this, it means that the market is taking a bit of a break from a recent breakout. It also tends to mean that another breakout is just around the corner. In this particular case, it’s a bullish flag (right side up), so the breakout is likely to be in the bullish direction. So, if you’re looking for a great day trading opportunity, watch SGYP closely for a breakout.

Are Synergy Pharmaceuticals Gains Likely To Last?

In my opinion, the answer to this question is also “Yes”. Looking at why the gains happened, we see that billionaire John Paulson took a decent sized stake in the company. Now, I never advise investing based on the actions of others; but with such a big position purchased, you’ve got to wonder why there’s so much faith in the stock. So, I did some digging; and it seems as though Synergy Pharmaceuticals has far more than billionaire support going for them.

SGYP is a clinical stage biopharmaceutical company. The company’s core focus is on a key gastrointestinal hormone that’s naturally found in the body called uroguanylin. Uroguanylin is one of the hormones that helps to regulate digestive functioning in the body. The company has found that many gastrointestinal problems can be solved by introducing treatments that mimic the activities of this hormone. So, their scientists have created two analogs of uroguanylin that seem to mirror the natural hormones activity; assisting with a wide range of gastrointestinal conditions. With a strong pipeline, solid management, and evidence that they are working hard to produce astonishing results, I’m expecting to see long term growth from Synergy Pharmaceuticals.

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