Market Overview

New Year Short Interest Swings In Biotech (BIIB, BMRN, MDVN)

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Among the leading biotech and emerging pharmaceutical companies, Biogen Idec (NASDAQ: BIIB), BioMarin Pharmaceutical (NASDAQ: BMRN) and Medivation (NASDAQ: MDVN) saw the most significant upswings between the December 31 and January 15 settlement dates.

Gilead Sciences, Pharmacyclics and Regeneron Pharmaceuticals saw modest growth in short interest during the period. But short sellers shied away from Alexion Pharmaceuticals, Amgen and Dendreon as the new year got underway.

The number of shares sold short in Celgene, Illumina, Seattle Genetics and Vertex Pharmaceuticals was relatively unchanged from the previous settlement date.

Below we take a closer look at how Biogen Idec, BioMarin Pharmaceutical and Medivation have fared and what analysts expect from them.

See also: Ariad Shares Continue to Surge Amid Buyout Rumors

Biogen Idec

This S&P 500 component saw short interest rise more than 12 percent during the period to around 2.90 million shares, or more than one percent of the total float. That followed two periods of falling short interest. It would take more than two days to close out all short positions.

The company develops and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders, and it announced a collaboration with Sangamo during the period. The market capitalization is more than $70 billion, and the long-term earnings per share (EPS) growth forecast is about 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 less than five percent upside potential. That consensus target is less than the recent 52-week high as well.

The share price retreated less than three percent in the past week, yet it is still up about 38 percent from six months ago and still well above the 50-day moving average. Biogen Idec's stock has outperformed not only the broader markets over the past six months, but larger competitor Pfizer as well.

BioMarin Pharmaceutical

After an eight percent drop in the previous period, the number of shares sold short in this biopharmaceutical company increased about nine percent to total more than 3.97 million. That represented almost three percent of the total float. The days to cover dropped to four in the period.

BioMarin offerings include Naglazyme and Kuvan. This San Rafael, California-based company now has a market cap of more than $9 billion. The forecast for the current quarter calls for the largest quarterly net loss in the past year. But the long-term EPS growth forecast is about 25 percent.

Nine of the 23 analysts polled rate the stock at Strong Buy, and ten more also recommend buying shares. They see some headroom for shares, as their mean price target is more than 14 percent higher than the current share price. That is less than the 52-week high, though.

Shares have pulled back more than seven percent in the past week, slipping below the 50-day moving average. The share price is more than 10 percent higher than six months ago. BioMarin has underperformed competitor Amicus Therapeutics in that time, but it has outperformed the S&P 500.

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Medivation

Short interest in this San Francisco-based company grew about nine percent in the first two weeks of the year to around 3.61 million shares. That was the greatest number of shares sold short since last July, and it represents about five percent of the float. The days to cover dropped from five to three.

This biopharmaceutical company offers treatments for prostate cancer. The more than $5 billion market cap company is expected to show a profit for the current quarter, its first quarterly earnings in a year. Note that both its return on equity and its operating margin are in negative territory.

All but two of the 19 surveyed analysts recommend buying Medivation shares, and that has been so for at least three months. However, their mean price target is only marginally higher than the current share price. Yet, one analysts sees about 28 percent upside potential.

The share price is more than four percent lower than a week ago, when shares were trading near the multiyear high. But it is still well above the 50-day moving average. Over the past six months, the stock has outperformed competitors Abbott Labs and Dendreon, as well as the broader markets.

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

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Posted-In: abbott laboratories Alexion Pharmaceuticals amgen Amicus Therapeutics biogen idec BioMarin PharmaceuticalShort Ideas Trading Ideas Best of Benzinga

 

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