Market Overview

Short Interest In Celgene, Onyx Continues To Shrink (CELG, ONXX, VRTX)

Among leading biotech and emerging pharmaceutical companies, Celgene (NASDAQ: CELG), Onyx Pharmaceuticals (NASDAQ: ONXX) and Vertex Pharmaceuticals (NASDAQ: VRTX) saw significant percentage declines in short interest between the July 31 and August 15 settlement dates.

Short sellers also shied away from Alexion Pharmaceuticals (NASDAQ: ALXN), Arena Pharmaceuticals (NASDAQ: ARNA), Gilead Sciences (NASDAQ: GILD), Illumina (NASDAQ: ILMN) and Regeneron Pharmaceuticals (NASDAQ: REGN) during that time.

Short interest in VIVUS (NASDAQ: VVUS) was essentially flat, relative to the previous period.

However, the number of shares sold short in Amgen (NASDAQ: AMGN), Biogen Idec (NASDAQ: BIIB), Dendreon (NASDAQ: DNDN) and Pharmacyclics (NASDAQ: PCYC) grew somewhat in that period.

Here we take a closer look at how Celgene, Onyx and Vertex have fared and what analysts expect from them.

See also: Amgen and Onyx Finally Ink Deal Two Months In The Making

Celgene

The short interest in this biopharmaceutical company retreated more than eight percent to 3.99 million shares, the lowest number of shares sold short since the end of May. That was about one percent of the total float in mid-August, and the days to cover remained less than two.

This New Jersey-based maker of therapies to treat cancer and immune-inflammatory related diseases has a market capitalization of about $58 billion. Celgene had an anti-cancer treatment approved by European regulators during the period. The company's long-term EPS growth forecast is about 22 percent.

Out of 29 analysts surveyed by Thomson/First Call, 13 rate the stock at Strong Buy and 11 others also recommend buying shares. They believe the stock has some headroom, as their mean price target is about six percent higher than the current share price. That target would be a new multiyear high.

Shares have pulled back about two percent in the past month, but the share price is still up about 74 percent since the beginning of the year. Celgene has outperformed larger competitor Johnson & Johnson (NYSE: JNJ) and the broader markets over the past six months.

Onyx Pharmaceuticals

Short interest in this biopharmaceutical company shrank almost 20 percent to total more than 4.18 million shares. The number of shares sold short has fallen in the past three periods. Short interest was less than six percent of the float in the middle of August. Days to cover dropped to less than two.

Onyx develops and commercializes therapies that target the molecular mechanisms that cause cancer. This South San Francisco-based company now has a market cap near $9 billion. It has posted smaller-than-expected net loss for the second quarter. The long-term EPS growth forecast is more than 44 percent.

Half of the polled analysts now recommend buying shares, while the rest rate the stock at Hold. The mean price target, or where analysts expect the share price to go, suggests upside potential for the shares of about 10 percent. That target would be a new multiyear high.

The stock soared in July on a takeover bid from Amgen, but the share price has pulled back more than six percent in the past month. 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.

Vertex Pharmaceuticals

Short interest in this Cambridge, Massachusetts-based company retreated more than eight percent to total more than 3.48 million shares. That was the lowest number of shares sold short in the past year. Short interest was less than two percent of the company's float. Days to cover was less than three.

Vertex manufactures small molecule drugs for the treatment of serious diseases such as hepatitis C and cystic fibrosis. It posted a lower per-share net loss for the second quarter and now has a market cap near $18 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 surveyed analysts is to buy shares of Vertex. None of them rated the stock at Underperform. The mean price target is about 17 percent higher than the current share price. Vertex shares have not traded at that level since 2000.

After hitting a multiyear high in mid-July, the share price has pulled back more than three percent in the past month. Because of a price surge back in April, Vertex has outperformed larger competitors Bristol-Myers Squibb (NYSE: BMY) and Merck, as well as the S&P 500, over the past six months.

See also: Vertex Updates Recent Progress and Upcoming Milestones in Clinical Development Programs

At the time of this writing, the author had no position in the mentioned equities.

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

 

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