Market Overview

Gilead Sciences Leads In Rising Short Interest Among Biotechs

Among leading biotech and emerging pharmaceutical companies, the number of shares sold short in Alexion Pharmaceuticals (NASDAQ: ALXN), BioMarin Pharmaceutical (NASDAQ: BMRN) and Gilead Sciences (NASDAQ: GILD) grew by the largest percentages in late October.

Biogen Idec (NASDAQ: BIIB), Illumina (NASDAQ: ILMN), Pharmacyclics (NASDAQ: PCYC), Seattle Genetics (NASDAQ: SGEN) and Vertex Pharmaceuticals (NASDAQ: VRTX) also saw their short interest increase between the Oct. 15 and Oct. 31 settlement dates.

Celgene (NASDAQ: CELG), however, was the standout, with short interest declining during the period. And the short interest in Amgen (NASDAQ: AMGN), Dendreon (NASDAQ: DNDN) and Regeneron Pharmaceuticals (NASDAQ: REGN) was relatively unchanged from the previous settlement date.

Let's take a closer look at how Alexion Pharmaceuticals, BioMarin Pharmaceutical and Gilead Sciences have fared and what analysts expect from them.

See also: Short Sellers Retreat From Pandora, Move On eBay

Alexion Pharmaceuticals. After showing little movement since August, the number of shares sold short in this biopharmaceutical company rose almost 16 percent in the period, to total more than 3.32 million. That represented more than one percent of Alexion's total float. Days to cover has declined since August to about two.

Alexion Pharmaceuticals offers Soliris, a treatment for a blood disorder. This Connecticut-based company posted better-than-expected third-quarter results and now has a market capitalization of more than $22 billion. The long-term earnings per share (EPS) growth forecast is almost 25 percent.

Nine of the 23 analysts surveyed by Thomson/First Call rate the stock at Strong Buy, and eight more also recommend buying shares. The mean price target, or where analysts expect the share price to go, suggests upside potential of around 10 percent. That target would be a new multiyear high.

Shares have risen more than six percent in the past month, despite retreating in the past week. The share price is about 16 percent higher than at the beginning of the year. Alexion has outperformed larger competitors Amgen and Baxter International (NYSE: BAX) over the past six months.

BioMarin Pharmaceutical. On top of an 11 percent rise in the previous period, short interest in this San Rafael, Calif.-based company grew about 12 percent to total more than 5.82 million shares. That was the greatest number since March, and it was about four percent of the float. Days to cover was more than three.

This biopharmaceuticals company has a market cap of more than $8 billion. Third-quarter revenue grew less than expected, but BioMarin reaffirmed its full-year guidance. The long-term EPS growth forecast is about 25 percent, though the return on equity and operating margin are both in the red.

Nine of the 22 polled analysts rate the stock at Strong Buy, and another eight also recommend buying shares. The analysts see room for shares to run, as the mean price target is about 23 percent higher than the current share price. But note that shares traded higher than that target back in September.

Shares have pulled back more than eight percent in the past month. The share price still is up more than 19 percent year to date. The stock has outperformed the likes of Amicus Therapeutics (NASDAQ: FOLD) over the past six months, but it underperformed the S&P 500.

Gilead Sciences. Short interest in this biopharmaceutical company has grown in the past four periods to about 70.09 million shares. That was the highest level this year, as well as more than four percent of the float. It would take about seven days to close out all of the short positions.

Gilead Sciences focuses on human therapeutics for the treatment of life-threatening diseases such as HIV infection and pulmonary arterial hypertension. The FDA backed its hepatitis C drug in October. The company has a market cap of about $104 billion. The return on equity is more than 29 percent.

All but three of the 26 surveyed analysts recommend buying shares, with 10 of them rating the stock at Strong Buy. Their mean price target is more than 14 percent higher than the current share price. That consensus target would be a new multiyear high.

Shares are up more than seven percent in the past month, despite pulling back in the past week. The share price is up almost 80 percent year to date. Over the past six months, the stock has outperformed larger competitors Pfizer (NYSE: PFE) and GlaxoSmithKline (NYSE: GSK).

See also:Is the Market Headed Toward a Big Break? Maybe

At the time of this writing, the author had no position in the mentioned equities.

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Posted-In: Alexion Pharmaceuticals amgenNews Guidance Short Ideas Analyst Ratings Tech Trading Ideas Best of Benzinga


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