Market Overview

Short Interest in Pharmacyclics Plunges (AMGN, ONXX, PCYC)

Among biotech and emerging pharmaceutical companies, Amgen (NASDAQ: AMGN), Onyx Pharmaceuticals (NASDAQ: ONXX) and Pharmacyclics (NASDAQ: PCYC) saw the most significant percentage declines in short interest between the June 28 and July 15 settlement dates.

Short sellers also shied away from Illumina (NASDAQ: ILMN), Regeneron Pharmaceuticals (NASDAQ: REGN) and Vertex Pharmaceuticals (NASDAQ: VRTX) during that time. Short interest in Dendreon (NASDAQ: DNDN) was essentially flat, relative to the previous period.

But the number of shares sold short in Alexion Pharmaceuticals (NASDAQ: ALXN), Arena Pharmaceuticals (NASDAQ: ARNA), Biogen Idec (NASDAQ: BIIB), Celgene (NASDAQ: CELG), Gilead Sciences (NASDAQ: GILD) and VIVUS (NASDAQ: VVUS) grew somewhat in that period.

Here we take a closer look at how Amgen, Onyx Pharmaceuticals and Pharmacyclics have fared and what analysts expect from them.

See also: Short Interest in Peabody Energy Rises, in Rhino Resource Partners Falls

Amgen

This California-based biotechnology medicines company saw short interest fall more than 15 percent to 8.16 million shares, the lowest number of shares sold short in at least a year. The short interest was about one percent of the float. But the days to cover remained steady at more than two.

The company develops and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses. It announced a product collaboration with Servier during the period. Amgen has a market capitalization of more than $82 billion and a dividend yield near 1.8 percent. Its return on equity is more than 23 percent.

Half of the 26 analysts surveyed by Thomson/First Call recommend buying shares, and just one recommends selling. The mean price target is less than four percent higher than the current share price, which means the analysts see little upside potential at this time.

The share price is up about 10 percent in the past month and almost 23 percent since the beginning of the year. Over the past six months, the stock has outperformed competitor Teva Pharmaceutical (NYSE: TEVA) and the S&P 500.

Onyx Pharmaceuticals

Short interest in this biopharmaceutical company retreated about 17 percent to more than 5.49 million shares, taking back a 13 percent gain in the previous period. Short interest was more than seven percent of the company's float. Days to cover dropped from more than six to less than two.

Onyx develops and commercializes therapies that target the molecular mechanisms that cause cancer. This South San Francisco-based company is expecting takeover bids from Amgen and Pfizer (NYSE: PFE). It has a market cap of more than $9 billion. The long-term EPS growth forecast is more than 44 percent, but the return on equity is in the red.

The consensus recommendation of the analysts surveyed remains to buy shares of Onyx, as it has been for at least three months. But note that the mean price target, or where analysts expect the share price to go, is only marginally higher than the current share price.

The stock soared after Onyx rejected a takeover bid from Amgen, and the share price is now about 71 percent higher year-to-date. Because of the surge, Onyx has outperformed larger competitors Merck (NYSE: MRK) and Novartis (NYSE: NVS), as well as the broader markets, over the past six months.

See also: Deutsche Bank Downgrades Onyx Pharmaceuticals on Lack of Upside

Pharmacyclics

Short interest in this clinical-stage biopharmaceutical company plunged more than 57 percent in early July to around 1.02 million shares. That is the smallest number of shares sold short in the past year, and days to cover decreased to about one. Short interest was almost two 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. In July it sought fast-track approval for its Ibrutinib. The $7 billion plus market cap company has a return on equity of more than 42 percent and an operating margin that is better than the industry average.

Half of the 14 polled analysts recommend buying shares, though none recommend selling. Their mean price target represents only about four percent potential upside, relative to the current share price. And that target is less than the recent 52-week high.

Shares are now trading more than 27 percent higher than a month ago, despite pulling back about four percent from the high last week. Over the past six months, the stock has outperformed larger competitor Merck 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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