Market Overview

Biogen Idec, Pharmacyclics See Surges In Short Interest (BIIB, CELG, PCYC)

Among leading biotech and emerging pharmaceutical companies, the number of shares sold short in Biogen Idec (NASDAQ: BIIB), Celgene (NASDAQ: CELG) and Pharmacyclics (NASDAQ: PCYC) grew by the largest percentages in late November.

Gilead Sciences, Regeneron Pharmaceuticals, Seattle Genetics and Vertex Pharmaceuticals also saw their short interest increase between the November 15 and November 29 settlement dates.

The short interest in Alexion Pharmaceuticals and Amgen was relatively unchanged from the previous settlement date. However, short sellers shied away from BioMarin Pharmaceutical, Dendreon and Illumina during the period.

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

See also: The One True Sector Bubble: Profits Here When It Crashes Soon

Biogen Idec

This S&P 500 component saw short interest rise more than 26 percent during the period to around 3.23 million shares. That was the largest number of shares sold short in the past year, and it represented more than one percent of the total float. The days to cover dropped to less than two in the period.

The company develops and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders, and in November it got good news for its multiple sclerosis drug in Europe. The market capitalization is more than $66 billion, and the long-term earnings per share (EPS) growth forecast is more than 19 percent.

The consensus recommendation of the 29 analysts polled by Thomson/First Call is to buy shares. Yet, their mean price target, or where they expect the share price to go, indicates only about four percent upside potential. That consensus target would be a multiyear high, though.

The share price is up more than 21 percent in the past month, even though it has pulled back somewhat after recently reaching a new multiyear high. Over the past six months, Biogen Idec's stock has outperformed not only the broader markets, but larger competitor Pfizer as well.

Celgene

The short interest in this biopharmaceutical company grew more than 14 percent in late November to more than 5.42 million shares, the highest number of shares short since April. That was more than one percent of the total float, and it would take about two days to close out all of the short positions.

This New Jersey-based maker of therapies to treat cancer and immune-inflammatory related diseases has a market cap of more than $68 billion. Analysts predict double-digit earnings and revenue growth for the current quarter. The company's long-term EPS growth forecast is about 23 percent.

Out of 28 analysts surveyed, 13 rate the stock at Strong Buy and 10 others also recommend buying shares. They believe the stock has some headroom, as their mean price target is more than six percent higher than the current share price. That target would be a new 52-week high.

Shares have climbed about 15 percent in the past month, and the share price is almost 48 percent higher than six months ago. Celgene has outperformed not only larger competitor Johnson & Johnson, but the broader markets as well over the past six months.

Pharmacyclics

Short interest in this clinical-stage biopharmaceutical company jumped more than 31 percent in late November to around 1.31 million shares. That is the greatest number of shares sold short since June, and the days to cover was more than one. Short interest was more 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 recently okay-ed its blood cancer drug. But the $8 billion plus market cap company has a price-to-earnings (P/E) ratio in the stratosphere.

Of the 18 surveyed analysts, 13 recommend buying shares and none recommend selling. They see room for shares to run, as their mean price target represents more than 23 percent potential upside, relative to the current share price. That consensus price target would be a new 52-week high.

Note that shares have retreated more than 15 percent in the past week. The share price is still more than 35 percent higher than six months ago. In that time, Pharmacyclics has outperformed larger competitor Merck, and the broader markets as well.

See also: The Quiet Period For Markets Has Arrived At Last

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

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Posted-In: Alexion Pharmaceuticals amgen biogen idec BioMarin Pharmaceutical Celgene DendreonShort Ideas Trading Ideas Best of Benzinga

 

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