Alexion, Pharmacyclics Buck Trend in Biotech Short Interest (ALXN, CELG, PCYC)
Declining short interest in Alexion Pharmaceuticals (NASDAQ: ALXN) and Pharmacyclics (NASDAQ: PCYC) bucked the trend among leading biotech and emerging pharmaceutical companies between the August 15 and August 30 settlement dates.
The number of shares sold short in Amgen (NASDAQ: AMGN), Biogen Idec (NASDAQ: BIIB), BioMarin Pharmaceutical (NASDAQ: BMRN), Regeneron Pharmaceuticals (NASDAQ: REGN) and Vertex Pharmaceuticals (NASDAQ: VRTX) grew somewhat in that period.
Short sellers moved on Celgene (NASDAQ: CELG) the most, but even there the short interest grew by less than 10 percent during the final weeks of August.
Here we take a closer look at how Alexion Pharmaceuticals, Celgene and Pharmacyclics and have fared and what analysts expect from them.
The number of shares sold short in this biopharmaceutical company shrank about six percent to total more than 2.69 million. Short interest has fallen in the past three periods to more than one percent of Alexion's total float. At more than three, the days to cover was the highest it has been since May.
Alexion Pharmaceuticals offers Soliris, a treatment for a blood disorder. This Connecticut -based company now has a market cap of more than $22 billion. The CEO sold more than 141,000 shares in the period and has sold more since. The long-term earnings per share (EPS) growth forecast is more than 25 percent.
Nine of the analysts polled by Thomson/First Call rate the stock at Strong Buy, and nine more also recommend buying shares. The mean price target, or where analysts expect the share price to go, suggests upside potential of more than five percent. That target is less than the 52-week high.
Shares have risen about four percent in the past month and are about 14 percent higher than at the beginning of the year. Alexion has outperformed larger competitors Amgen and Baxter International (NYSE: BAX), as well as the broader markets, over the past six months.
The short interest in this biopharmaceutical company rose more than eight percent to 4.33 million shares, taking back a similar decrease in the previous period. That was about one percent of the total float at the end of 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 cap of more than $61 billion. Analysts predict double-digit earnings and revenue growth for the current quarter. The company's long-term EPS growth forecast is about 22 percent.
Out of 29 analysts surveyed, 13 rate the stock at Strong Buy and 11 others also recommend buying shares. Yet they believe the stock has little headroom, as their mean price target is only marginally higher than the current share price. That target would be a new 52-week high though.
Shares have climbed almost nine percent in the past month, and the share price is up more than 84 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.
Short interest in this clinical-stage biopharmaceutical company shrank more than 16 percent in late August to more than 810,000 shares. That is the smallest number of shares sold short in the past year, and days to cover was more than one. Short interest was less than two percent of the total 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. The FDA agreed to a fast-track review of its cancer drug. The $8 billion plus market cap company has a return on equity of more than 22 percent.
Half of the 14 polled analysts recommend buying shares, though none recommend selling. However, their mean price target represents less than five percent potential upside, relative to the current share price. Note that the consensus target is less than the recent 52-week high.
Shares reached a new multiyear high last week. The share price is more than 89 percent higher than at the beginning of the year. Over the past six months, the stock has outperformed larger competitor Merck (NYSE: MRK) and the broader markets.
At the time of this writing, the author had no position in the mentioned equities.
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