Market Overview

Short Sellers Move On Amgen, Vertex (AMGN, PCYC, VRTX)

Among leading biotech and emerging pharmaceutical companies, short sellers moved on Amgen (NASDAQ: AMGN), Pharmacyclics (NASDAQ: PCYC) and Vertex Pharmaceuticals (NASDAQ: VRTX) the most strongly in late September.

The number of shares sold short in Dendreon (NASDAQ: DNDN) and Biogen Idec (NASDAQ: BIIB) also grew somewhat between the September 13 and September 30 settlement dates.

However, short interest in Alexion Pharmaceuticals (NASDAQ: ALXN), Gilead Sciences (NASDAQ: GILD) and Illumina (NASDAQ: ILMN) was relatively unchanged from the previous period.

BioMarin Pharmaceutical (NASDAQ: BMRN), Celgene (NASDAQ: CELG), Regeneron Pharmaceuticals (NASDAQ: REGN) and Seattle Genetics (NASDAQ: SGEN) saw short interest decline in the final weeks of the month.

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

See also: Applied Materials, Marvell Technology Face Rising Short Interest

Amgen

This California-based biotechnology medicines company saw short interest grow more than 21 percent to 10.37 million shares, the greatest number of shares sold short since April, and more than one percent of the float. But the days to cover rose to three for the first time since early this year.

The company develops and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses. Its acquisition of Onyx Pharmaceuticals (NASDAQ: ONXX) proceeded during the period. Amgen has a market capitalization of more than $83 billion and a dividend yield near 1.7 percent.

Of the 25 analysts who follow the stock that were surveyed by Thomson/First Call, 12 recommend buying shares, and just one recommends selling. The mean price target, or where analysts predict the share price will go, is more than 10 percent higher than the current share price.

The share price has pulled back about three percent in the past two weeks and but is still up more than 23 percent since the beginning of the year. Over the past six months, the stock has underperformed competitor Teva Pharmaceutical (NYSE: TEVA) and the S&P 500.

Pharmacyclics

Short interest in this clinical-stage biopharmaceutical company rose about 17 percent in late September to around 988,000 shares. That was the second period of growth after five straight periods of declines in the number of shares sold short. Short interest was less than 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. Deutsche Bank and J.P. Morgan initiated coverage of the stock during the period. The $9 billion plus market cap company has an operating margin that is better than the industry average.

Seven of the 13 polled analysts recommend buying shares, though none recommend selling. Their mean price target represents only about three percent potential upside, relative to the current share price. And that target is less than the recent 52-week high.

Shares have pulled back more than seven percent in the last week. The share price is up more than 100 percent year-to-date. Over the past six months, the stock has outperformed larger competitor Merck (NYSE: MRK) and the broader markets.

See also: Short Interest Still Rising In SolarCity, Falling In Advanced Energy

Vertex Pharmaceuticals

Short interest in this Cambridge, Massachusetts-based company jumped about 24 percent to total more than 4.31 million shares, or about two percent of the total float. That was the highest number of shares short since last May, when short interest had just come off a year-to-date high.

Vertex manufactures small molecule drugs for the treatment of serious diseases such as hepatitis C and cystic fibrosis. It has a market cap of around $16 billion. The long-term EPS growth forecast is less than seven percent, and the return on equity and operating margin are in the red.

For the past three months, the consensus recommendation of the polled analysts has been to buy shares of Vertex. They see room for shares to run, as the mean price target is more than 27 percent higher than the current share price. Vertex shares have not traded at that level since 2000.

Shares have bounced mostly between $75 and $85 since April, until they dropped below $70 this week. The share price is up more than 62 percent year-to-date. The stock has outperformed larger competitors Bristol-Myers Squibb (NYSE: BMY) and Merck over the past six months.

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

Posted-In: Alexion Pharmaceuticals amgen biogen idec BioMarin Pharmaceutical bristol-myers squibb Celgene Dendreon Gilead Sciences illumina merck onyx pharmaceuticals pharmacyclics Regeneron Pharmaceuticals seattle genetics Teva Pharmaceutical vertex pharmaceuticalsShort Ideas Trading Ideas Best of Benzinga

 

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