Celgene, Dendreon Lead Short Interest Trend In Biotechs (BMRN, CELG, DNDN)
The number of shares sold short in leading biotech and emerging pharmaceutical companies mostly declined between the December 13 and December 31 settlement dates.
Short sellers also shied away from Biogen Idec, Gilead Sciences, Pharmacyclics and Regeneron Pharmaceuticals during the period. In Amgen, Illumina, and Seattle Genetics, short interest was relatively unchanged from the previous settlement date.
The standouts were Alexion Pharmaceuticals, Medivation and Vertex Pharmaceuticals, which saw modest growth in short interest.
Here we take a closer look at how BioMarin, Celgene and Dendreon have fared and what analysts expect from them.
See also: Top Stem Cells Stocks
The number of shares sold short in this biopharmaceutical company declined more than eight percent to total more than 3.65 million. That was the lowest level of short interest in the past year and came to about more than two percent of the total float. The days to cover rose to about five in the period.
BioMarin offerings include Naglazyme and Kuvan. This San Rafael, California-based company now has a market cap of about $10 billion. Revenues are expected to grow by nine percent for the year just ended and more than 22 percent in the next. The long-term earnings per share (EPS) growth forecast is about 25 percent.
Nine of the 22 analysts polled by Thomson/First Call rate the stock at Strong Buy, and eight more also recommend buying shares. The mean price target, or where analysts expect the share price to go, suggests upside potential of more than 12 percent. That target is a bit less than the 52-week high.
Shares have faced resistance around $70 since early December. The share price is more than 15 percent higher than six months ago. BioMarin has outperformed not only competitor Amicus Therapeutics in that time, but the S&P 500 as well.
The short interest in this biopharmaceutical company shrank more than 16 percent to more than 4.53 million shares. That was about one percent of the total float, as well as the lowest number of shares sold short since last August. It would take more than two days to sell out all short positions.
This New Jersey-based maker of therapies to treat cancer and immune-inflammatory related diseases has a market cap of about $70 billion. Analysts predict double-digit earnings and revenue growth for the quarter just ended. The company's long-term EPS growth forecast is more than 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 seven higher than the current share price. That target would be a new multiyear high.
Shares have looked for direction since hitting a 52-week high early last month, but the share price is up more than 25 percent from six months ago. In that time, Celgene has outperformed larger competitor Johnson & Johnson and the broader markets.
Short interest in this biotechnology company focused on cancer treatment fell almost 11 percent in late December to around 48.38 million shares. That was the smallest number of shares sold short in almost a year, but it was still about 32 percent of the float, and the days to cover was more than 11.
This Seattle-based company is the maker of Provenge. The approximately $450 million market cap company is expected to show double-digit percentage revenue growth this year. It has a return on equity of more than 375 percent, but note that the operating margin is in the red.
The analysts' consensus recommendation is to hold Dendreon shares, and it has been for at least three months. Their mean price target indicates they see about 10 percent potential upside, relative to the current share price. However, shares traded higher than that back in December.
The share price is up more than 32 percent from the 52-week low back in October, but it is still more than 51 percent lower than a year ago. Over the past six months, Dendreon has underperformed larger competitor Sanofi and the broader markets as well.
At the time of this writing, the author had no position in the mentioned equities.
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