Short Sellers Shy Away from Biotech Firms
The short interest data is out from the July 31 settlement date. By and large short sellers have retreated from gambles on biotech firms compared to the July 13 settlement date. A couple of notable exceptions were Dendreon (NASDAQ: DNDN), for which short interest was higher by 7 percent to 40.8 million shares in that time, and shares sold short in Regeneron Pharmaceuticals (NASDAQ: REGN) increased 7.2 percent to 4.9 million.
Here is closer look at Biogen Idec (NASDAQ: BIIB), Celgene (NASDAQ: CELG), Gilead Sciences (NASDAQ: GILD), Onyx Pharmaceuticals (NASDAQ: ONXX) and VIVUS (NASDAQ: VVUS), which all saw declines in short interest between July 13 and July 31.
This S&P 500 component saw short interest fall 3.9 percent to 2.4 million shares. Biogen Idec develops and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders. It has a market capitalization near $39 billion and a return on equity of about 22 percent. The company beat consensus estimates for both the top line and bottom line when it posted second-quarter results in July. Of the 25 analysts polled by Thomson First Call, 16 recommend buying shares.
Short interest in this maker of therapies to treat cancer and immune-inflammatory related diseases declined 11.8 percent to 6.3 million shares. The return on equity of this S&P 500 component is a healthy 26 percent, and the long-term earnings per share (EPS) growth forecast is nearly 23 percent. It is headquartered in New Jersey and has a market cap of about $31 billion. Thirteen out of 27 analysts recommend buying shares of Celgene; none recommend selling.
Shares sold short in Gilead Sciences dipped 1.9 percent to 18.0 million. This maker of therapeutics for the treatment of life-threatening diseases such as HIV and hepatitis has a market cap near $43 billion. It too is an S&P 500 component and has a return on equity more than 36 percent. The mean target price of analysts is about 9 percent higher than the current share price, as well as higher than the 52-week high. The share price has jumped about 12 percent in the past month.
Short interest in Onyx Pharmaceuticals fell 4.8 percent to 5.9 million shares. This South San Francisco-based company develops therapies that target the molecular mechanisms that cause cancer. Its long-term EPS growth forecast is more than 18 percent, and the mean price target is more than 22 percent higher than the current share price. Its market cap is near $4.5 billion. The share price jumped 47 percent in June following favorable news from an FDA panel about Onyx's blood cancer drug.
This Mountain View, Calif.-based biopharmaceutical company saw short interest slip 8.9 percent to 13.8 million shares. The market cap is above $2 billion. The long-term EPS growth forecast is about 51 percent, but note that the return on equity is in negative territory. However, the mean target price is more than 43 percent higher than the current share price, as well as higher than the 52-week high. Eight out of 13 analysts surveyed recommend buying shares; none recommend selling.
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