Market Overview

Short Interest in Vertex Rises, in Biogen Idec Falls

Among biotech and emerging pharmaceutical companies, Regeneron Pharmaceuticals (NASDAQ: REGN) and Vertex Pharmaceuticals (NASDAQ: VRTX) saw he most significant rise in short interest between the April 30 and May 15 settlement dates.

The number of shares sold short in Alexion Pharmaceuticals (NASDAQ: ALXN), Arena Pharmaceuticals (NASDAQ: ARNA), Celgene (NASDAQ: CELG), Illumina (NASDAQ: ILMN), Onyx Pharmaceuticals (NASDAQ: ONXX) and VIVUS (NASDAQ: VVUS) also grew somewhat in that period.

Biogen Idec (NASDAQ: BIIB) saw the largest percentage decrease in short interest. But short sellers also shied away from Amgen (NASDAQ: AMGN), Dendreon (NASDAQ: DNDN), Gilead Sciences (NASDAQ: GILD) and Pharmacyclics (NASDAQ: PCYC) somewhat during that time.

Here we take a closer look at how Biogen Idec, Regeneron Pharmaceuticals and Vertex Pharmaceuticals have fared and what analysts expect from them.

Biogen Idec

This S&P 500 component saw short interest diminish almost 16 percent during the period to 1.99 million shares. That was the lowest number of shares sold short since last October, and it represented less than one percent of the float. Days to cover remained at more than one.

The company develops and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders. In May, Biogen Idec was a Jim Cramer stock pick. Its market capitalization is more than $57 billion and the return on equity is about 22 percent. The long-term earnings per share (EPS) growth forecast is about 17 percent.

The consensus recommendation of the analysts polled by Thomson/First Call is to buy shares. But the current share price has overrun their mean price target, meaning they see no upside potential at this time. But the street-high target is more than 10 percent higher than the current share price.

The share price is up more than 60 percent year-to-date and reached a multiyear high yesterday. Over the past six months, the stock has outperformed larger competitor Pfizer (NYSE: PFE) and the broader markets.

Regeneron Pharmaceuticals

This Tarrytown, New York-based biotech company saw short interest swell about nine percent to 4.16 million shares, on the second highest average daily volume so far this year. The number of shares sold short in mid-May represented more than five percent of the float. Days to cover was more than two.

Regeneron develops, manufactures and commercializes medicines for the treatment of serious medical conditions. It posted better-than-expected first-quarter earnings earlier this month. The company has a market cap of about $24 billion. Its operating margin is better than the industry average, and the return on equity is more than 87 percent.

Analysts on average recommend buying shares, but few if any recommend selling. They believe the stock has some room to run, as their mean price target is more than 13 higher than the current share price. Note that the consensus target would be a new multiyear high.

The share price is up more than 38 percent year-to-date, though it has retreated about 11 percent from a recent 52-week high. Over the past six months, the stock has outperformed peers Amgen and Novartis (NYSE: NVS), as well as the broader markets.

Vertex Pharmaceuticals

Short interest in this Cambridge, Massachusetts-based company jumped about 25 percent to total more than 7.04 million shares. That was the highest number of shares short since last September. Short interest was more than three percent of the company's float at mid-May. Days to cover was nearly three.

Vertex manufactures small molecule drugs for the treatment of serious diseases such as hepatitis C and cystic fibrosis. Lower first-quarter earnings beat consensus estimates. Vertex now has a market cap of more than $17 billion. The long-term EPS growth forecast is less than seven percent, and the return on equity is in the red.

The consensus recommendation of the polled analysts is to buy shares of Vertex. At last check, only one analyst rated it at Underperform. The mean price target is more than 16 percent higher than the current share price. Vertex shares have not traded at that level since 2000.

The stock soared in April on positive drug trial results, but the share price has pulled back more than eight percent since then. Because of the surge, Vertex has outperformed larger competitors Bristol-Myers Squibb (NYSE: BMY) and Merck (NYSE: MRK) over the past six months.

Posted-In: Alexion Pharmaceuticals amgen Arena Pharmaceuticals biogen idec bristol-myers squibb CelgeneShort Ideas Trading Ideas Best of Benzinga

 

Related Articles (ALXN + AMGN)

Around the Web, We're Loving...

Get Benzinga's Newsletters