Market Overview

Short Sellers Move Out of Amgen, Celgene, Pharmacyclics

The short interest in biotech and emerging pharmaceutical companies was mixed in the final two weeks of March.

The number of shares sold short in Alexion Pharmaceuticals (NASDAQ: ALXN), Arena Pharmaceuticals (NASDAQ: ARNA), Illumina (NASDAQ: ILMN), Onyx Pharmaceuticals (NASDAQ: ONXX), Vertex Pharmaceuticals (NASDAQ: VRTX) and VIVUS (NASDAQ: VVUS) grew somewhat between the February 28 and March 15 settlement dates.

But Amgen (NASDAQ: AMGN), Celgene (NASDAQ: CELG) and Pharmacyclics (NASDAQ: PCYC) saw significant retreats in short interest in that period. We take a closer look at them below.

Short sellers also shied away from Biogen Idec (NASDAQ: BIIB), Dendreon (NASDAQ: DNDN), Gilead Sciences (NASDAQ: GILD) and Regeneron Pharmaceuticals (NASDAQ: REGN) somewhat during that time.

Amgen

This California-based biotechnology medicines company saw short interest fall almost 15 percent to 10.24 million shares, on top of a 19 percent drop in the previous period. The end-of-March figure was the lowest number of shares sold short in at least a year. The short interest was about 1.4 percent of the float.

The company develops and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses. It said during the period that a melanoma drug showed promise in key phase 3 trial. Amgen has a market capitalization of more than $79 billion and a dividend yield near 1.8 percent. Its return on equity is almost 23 percent.

Only 12 of the 27 analysts surveyed by Thomson/First Call recommend buying shares, but just one recommends selling. The current share price is higher than the mean price target, which means the analysts do not see any upside potential at this time.

The share price is up about 17 percent year-to-date and reached a multiyear high last week. Over the past six months, the stock has outperformed competitor Teva Pharmaceutical (NYSE: TEVA) and the S&P 500.

Celgene

The short interest in this biopharmaceutical company retreated about 23 percent in the period to 4.95 million. That erased a 16 percent gain in short interest in the previous period. The number of shares sold short represented a little more than one percent of the total float at the end of March.

This maker of therapies to treat cancer and immune-inflammatory related diseases has a market cap of more than $47 billion. Celgene is an S&P 500 component, and in late March it was a Jim Cramer pick despite at least one analyst downgrade. The company's long-term earnings per share (EPS) growth forecast is about 23 percent, and the return on equity is about 26 percent.

Out of the 29 analysts polled, 13 rate the stock at Strong Buy and 10 others also recommend buying shares. However, the share price has outrun the mean price target. For what it is worth, the street-high price target suggests more than 16 percent upside.

Shares are up more than 43 percent year-to-date and reached a multiyear high last week. Celgene has outperformed competitor Johnson & Johnson (NYSE: JNJ) and the S&P 500 over the past six months.

Pharmacyclics

Short interest in this clinical-stage biopharmaceutical company dropped more than 19 percent to 2.77 million shares. That is the smallest number of shares sold short in the past year, and days to cover has fallen to less than three. Short interest is almost five percent of the company's float.

This Sunnyvale, California-based company focuses on the development and commercialization of small-molecule drugs for the treatment of cancer and immune mediated diseases. Pharmacyclics has a market cap of more than $5 billion. The return on equity is more than 42 percent and the operating margin is better than the industry average. But the P/E ratio is higher than the industry average.

Seven of the 13 polled analysts recommend buying shares, though none recommend selling. Their mean price target represents about 22 percent potential upside, relative to the current share price. That target would be a new multiyear high.

Shares are now trading more than 22 percent higher year-to-date, despite pulling back more than 18 percent in the past month. Over the past six months, the stock has outperformed larger competitor Merck (NYSE: MRK) and the broader markets.

Posted-In: Alexion Pharmaceuticals amgen Arena Pharmaceuticals biogen idec Celgene DendreonShort Ideas Trading Ideas Best of Benzinga

 

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