This sub-$10 pharma stock is attempting a bullish breakout, according to the charts

CNBC

02-07-2025

Healthcare shares performed well on Tuesday, and one notable mover was Viatris (VTRS) . The stock popped up in a routine review of S & P 500 components, where we constantly look for potential basing formations or bullish patterns — whether near highs or attempting to bottom after long periods of underperformance. VTRS clearly falls into the latter category. As we can see, the stock is attempting to break out of two overlapping inverse head-and-shoulders patterns. A decisive move through the $9.50 area would trigger the larger formation, setting up a potential target near $12.30. A logical stop loss would be just below 8.65, near the right shoulder of the smaller pattern and also near the rising 50-day moving average. Now, it's not as if VTRS has sat out the epic market-wide snapback over the past few months—far from it. The stock is already up 38% from its April low, outperforming the S & P 500 and many of its components over that time frame. Still, that recovery pales in comparison to the preceding, nearly 50% decline it suffered from late 2024 through April'25. Looking back at its erratic trading since 2022, a few things stand out. First, the stock has gone through a series of sharp multi-month declines, followed by powerful snapback rallies. And notably, those rallies have consistently produced larger percentage gains than the preceding drawdowns. Another clear takeaway from the chart: in three of the last four rallies, the stock went on to make a higher high relative to the most recent peak. That's the blueprint VTRS bulls will be watching for again now. Thus, if that pattern is to repeat, VTRS likely has more upside ahead. Finally, zooming way out to include price action over the past two decades, it's clear that VTRS remains well below its 2015 highs—but the current comeback is starting to resemble a prior major recovery. In both 2008 and now, 2025, the stock undercut clear multi-year support levels during broad market crashes, only to reverse sharply higher and reclaim those same levels. A few months later in early 2009, the stock went on to break through a steep downtrend line that had been in place for two years. That breakout marked a turning point, triggering an even stronger recovery that extended for several years. Currently, VTRS soon could be confronting an even longer-term downtrend line, drawn from the 2015 peak. From a technical perspective, the next obvious step would be to break above that line. If it can do so —especially while taking advantage of the bullish chart patterns mentioned earlier—then the tide may finally turn. Momentum, which has been negative for years, could shift toward a more constructive path going forward. First step – break out from the small bullish formations. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.