Market Overview

Short Interest Swings in Biotech Stocks (BIIB, CELG, VVUS)

The short interest in biotech and emerging pharmaceutical companies was mixed again in the first two weeks of January.

The number of shares sold short in Arena Pharmaceuticals (NASDAQ: ARNA), Dendreon (NASDAQ: DNDN), Gilead Sciences (NASDAQ: GILD), Onyx Pharmaceuticals (NASDAQ: ONXX) and Vertex Pharmaceuticals (NASDAQ: VRTX) grew somewhat between the December 31 and January 15 settlement dates.

But short interest in Alexion Pharmaceuticals (NASDAQ: ALXN), Amgen (NASDAQ: AMGN), Illumina (NASDAQ: ILMN), Pharmacyclics (NASDAQ: PCYC) and Regeneron Pharmaceuticals (NASDAQ: REGN) declined during that time.

Three stocks saw swings of more than 10 percent in short interest between the December 31 and January 15 settlement dates. They were Biogen Idec (NASDAQ: BIIB), Celgene (NASDAQ: CELG) and VIVUS (NASDAQ: VVUS).

Biogen Idec

This American biotechnology company saw short interest rise more than 27 percent to 3.04 million shares. That is the highest number of shares sold short in the past year. But short interest is a little more than one percent of the float.

The company develops and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders. In early January, Biogen Idec's late-stage ALS candidate, dexpramipexole, failed trials and the company decided to scrap development.

Biogen Idec has a market capitalization of about $35 billion and a return on equity of more than 21 percent. The long-term earnings per share (EPS) growth forecast is more than 15 percent.

Fourteen of the 28 analysts surveyed by Thomson/First Call recommend buying shares. They believe the stock has some room to run as their mean price target is a more than six percent higher than the current share price. But that target is less than the 52-week high reached in September.

Over the past six months, the stock has underperformed larger competitor Pfizer (NYSE: PFE) as well as the S&P 500.

Celgene

The short interest in this biopharmaceutical company surged more than 47 percent to 6.89 million. That was the highest number of shares sold short since July. But it is less than two percent of the float.

This maker of therapies to treat cancer and immune-inflammatory related diseases has a market cap of more than $30 billion. Celgene is an S&P 500 component, and in January saw analyst upgrades of the stock following the release of its optimistic outlook.

The company's return on equity is more than 28 percent, and the long-term earnings per share (EPS) growth forecast is more than 22 percent.

Out of 29 analysts polled by Thomson/First Call, 14 rate the stock at Strong Buy and 10 others also recommend buying shares. The mean price target indicates upside potential of more than eight percent and would be a new multiyear high. Shares are up more than 26 percent in the past month.

The stock has outperformed Johnson & Johnson (NYSE: JNJ) and the S&P 500 over the past six months.

VIVUS

Short interest in this Mountain View, California-based company increased almost 12 percent to 23.61 million shares. The shares sold short are at their highest level in a year and represent more than 23 percent of the float.

VIVUS therapies address obesity, sleep apnea, diabetes and male sexual health. The announcement of a surge in prescriptions of an obesity drug boosted shares in early January. The company now has a market cap of about $1.3 billion. The long-term EPS growth forecast is about 51 percent, but the return on equity is in negative territory.

Seven of the 12 surveyed analysts who follow the stock recommend buying shares. Their mean price target, or where they expect the share price to go, is almost 39 percent higher than the current share price. But note that the share price is still more than 6o percent lower than the 52-week high back in July.

Over the past six months, VIVUS has underperformed larger competitors Eli Lilly (NYSE: LLY) and GlaxoSmithKline (NYSE: GSK), as well as the broader markets.

ETFs

Exchange traded fund iShares Nasdaq Biotechnology (NASDAQ: IBB) includes Biogen Idec, Celgene and other companies mentioned here among its top 10 holdings. Shares are up more than 27 percent over the past year, despite plateauing in the past three weeks.

SPDR S&P Biotech (NYSE: XBI) is up about 29 percent year to date, despite also meeting resistance recently.

Posted-In: Alexion Pharmaceuticals amgen Arena Pharmaceuticals biogen idec CelgeneLong Ideas Short Ideas Trading Ideas Best of Benzinga

 

Related Articles (ALXN + AMGN)

Around the Web, We're Loving...

Get Benzinga's Newsletters