Hutchmed Plummets 9.7% on Earnings Volatility: Is This a Buying Opportunity or a Warning Signal?

Summary
• Hutchmed (HCM) plunges 9.68% intraday to $16.19, its lowest since 2023
• $455M net income driven by $416M stake sale in SHPL
• ORPATHYS gains $11M milestone but China sales for ELUNATE drop 29%

Today’s 9.7% selloff in Hutchmed, a biotech giant navigating a $1.36B cash surge and a new ATTC platform, has triggered panic among investors. The stock’s sharp decline from $17.23 to $15.705—its lowest since 2023—reflects a mix of profit-taking from the SHPL divestment and skepticism over China sales headwinds. With a 52-week range of $11.505–$21.50, the stock now tests critical support levels as its ATTC pipeline faces its first major market test.

Divestment Windfall Overshadows China Sales Woes
Hutchmed’s 9.7% intraday drop stems from a dislocation between its $455M net income—largely from a $416M gain on a SHPL stake sale—and ongoing China sales declines. While the company’s ATTC platform and ORPATHYS milestones signal long-term promise, near-term pressures persist: ELUNATE’s China sales fell 29% to $43M amid competitive pressures, and SULANDA’s revenue dropped 49% to $12.7M. The market is recalibrating for a 2025 revenue forecast cut to $270–$350M, with delayed NDA reviews for sovleplenib adding uncertainty. The selloff reflects profit-taking from the SHPL windfall and skepticism over China’s ability to offset global growth.

Biotech Sector Mixed as AMGN Rises 0.45%
The biotech sector remains fragmented, with Amgen (AMGN) rising 0.45% on strong Q2 results, while Hutchmed’s 9.7% drop highlights sector-specific challenges. While AMGN’s oncology pipeline and pricing power buoy its shares, Hutchmed’s reliance on China’s competitive market and delayed NDA reviews create a stark contrast. The sector’s 52-week high of $21.50 for HCM versus AMGN’s $219.50 underscores divergent growth trajectories.

Options and ETFs for Navigating HCM’s Volatility
• MACD: 0.515 (bearish divergence from signal line 0.584)
• RSI: 53.96 (neutral, not overbought)
• Bollinger Bands: 15.89–19.03 (current price near lower band)
• 200D MA: 15.697 (price slightly above)

Hutchmed’s technicals suggest a short-term bearish bias, with key support at $15.89 (lower Bollinger band) and resistance at $17.46 (20D MA). The stock’s 52-week range and 3.1x dynamic P/E indicate undervaluation, but near-term risks include China sales volatility and delayed NDA reviews. For leveraged exposure, consider XBI (iShares Biotechnology ETF) or XLV (Health Care Select Sector SPDR), though liquidity constraints in HCM’s options limit active trading.

Top Options:
• HCM20251121C15 (Call, $15 strike, 2025-11-21):
- IV: 32.87% (moderate)
- Delta: 0.492 (moderate sensitivity)
- Theta: -0.0123 (high time decay)
- Gamma: 0.0757 (moderate price sensitivity)
- Turnover: 0 (low liquidity)
- Leverage: 9.59% (high)
- Payoff (5% down): $0.81 (max(0, 15.38 - 15))
- Why: High leverage and moderate delta make this call ideal for a rebound above $15.89.
• HCM20251121C17.5 (Call, $17.5 strike, 2025-11-21):
- IV: 59.74% (high)
- Delta: 0.395 (moderate sensitivity)
- Theta: -0.0139 (high time decay)
- Gamma: 0.0579 (moderate price sensitivity)
- Turnover: 0 (low liquidity)
- Leverage: 10.87% (high)
- Payoff (5% down): $0 (max(0, 15.38 - 17.5))
- Why: High IV and leverage suit aggressive bulls expecting a bounce above $17.46.

Action: Aggressive bulls may consider HCM20251121C15 into a break above $15.89, while hedging with HCM20251121P15 (put) for downside protection.

Backtest Hutchmed Stock Performance
The backtest of HCM's performance after an intraday plunge of -10% shows favorable results. The 3-Day win rate is 51.29%, the 10-Day win rate is 51.45%, and the 30-Day win rate is 54.19%. Additionally, the maximum return during the backtest period was 2.09%, which occurred on day 59, indicating that HCM has a good chance of recovering from significant intraday losses.

HCM at Crossroads: Buy the Dip or Sell the News?
Hutchmed’s 9.7% drop has created a critical inflection point, with its $15.89 support level and $17.46 20D MA acting as pivotal markers. While the $1.36B cash position and ATTC pipeline offer long-term optimism, near-term risks include China sales volatility and delayed NDA reviews. Investors should watch for a break below $15.89 (lower Bollinger band) or a rebound above $17.46 (20D MA). Meanwhile, Amgen’s 0.45% rise highlights sector divergence. For HCM, the key question is whether the selloff is a buying opportunity or a warning signal—monitor the $15.89 support and $17.46 resistance for clarity.