Celgene, Pharmacyclics Lead Biotech Short Interest Trend (CELG, MDVN, PCYC)
After largely shying away in the previous period, short sellers found renewed interest in many of the leading biotech and emerging pharmaceutical companies between the February 28 and March 14 settlement dates.
The number of Amgen, Gilead Sciences, Questcor Pharmaceuticals, Regeneron Pharmaceuticals and Vertex Pharmaceuticals shares sold short in the period grew more modestly. Short interest in Dendreon was about the same as in the previous period.
However, short sellers retreated somewhat from Alexion Pharmaceuticals, Biogen Idec, BioMarin Pharmaceutical, Illumina, Incyte and Seattle Genetics in the first weeks of the month.
Below we take a closer look at how Celgene, Medivation and Pharmacyclics have fared and what analysts expect from them.
The short interest in this biopharmaceutical company jumped almost 34 percent to more than 6.12 million shares. That was more than one percent of the total float, as well as the largest number of shares sold short in the past year. It would take less 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 capitalization of more than $58 billion. Analysts predict double-digit earnings and revenue growth for the current quarter. The company's long-term earnings per share (EPS) growth forecast is more than 24 percent.
Out of 28 analysts surveyed by Thomson/First Call, 13 rate the stock at Strong Buy and 12 others also recommend buying shares. They believe the stock has plenty of headroom, as their mean price target is more than 24 percent higher than the current share price. That target would be a new multiyear high.
Shares have retreated about 14 percent in the past month, falling below the 200-day moving average for the first time in more than a year. Over the past six months, the stock has underperformed not only larger competitor Johnson & Johnson but the broader markets as well.
Short interest in this San Francisco-based company grew more than 15 percent early in the month to around 4.00 million shares. That was the highest number of shares sold short since last July, and it represents more than five percent of the float. The days to cover rose to about three.
This biopharmaceutical company offers treatments for prostate cancer. The nearly $5 billion market cap company swung to a profit in its most recent report, but it also offered weak guidance. Note that both its return on equity and its operating margin are in negative territory.
Of the 20 surveyed analysts, seven rate the stock at Strong Buy, and eight more also recommend buying Medivation shares. They see plenty of room for shares to run, as their mean price target is about 31 percent higher than the current share price. That consensus target would be a new multiyear high.
However, note that the share price is about 25 percent lower than a month ago, though still up more than 11 percent in the past six months. It has dropped below the 50-day moving average. Over the past six months, the stock has outperformed competitor Dendreon, as well as the S&P 500.
Short interest in this clinical-stage biopharmaceutical company surged more than 33 percent during the period to around 1.97 million shares. That is the greatest number of shares sold short since June, and the days to cover was about two. Short interest was more than three 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. A number of insiders sold shares in March. The $8 billion plus market cap company has a price-to-earnings (P/E) ratio in the stratosphere.
Of the 17 surveyed analysts, 13 recommend buying shares and none recommend selling. Their mean price target represents more than 33 percent potential upside, relative to the current share price. Here too, the consensus price target would be a new multiyear high.
Shares have pulled back more than 24 percent in the past month, falling below the 200-day moving average. The share price is still about 40 percent higher than a year ago. Over the past six months, Pharmacyclics has underperformed larger competitor Merck, 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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