Surges In Biotech Short Interest (INCY, PCYC, REGN)
Biotech stocks have proved to be volatile this year, and short sellers piled on Incyte (NASDAQ: INCY) between the April 15 and April 30 settlement dates. Pharmacyclics (NASDAQ: PCYC) and Regeneron Pharmaceuticals (NASDAQ: REGN) also saw double-digit percentage increases in the number of their shares sold short.
Among other leading biotechs and emerging pharmaceuticals, short interest gains were also seen in BioMarin Pharmaceutical, Celgene, Dendreon, Gilead Sciences, Medivation and Questcor Pharmaceuticals in the final weeks of the month.
However, the number of shares short in Alexion Pharmaceuticals, Amgen, Biogen Idec, Illumina, Seattle Genetics and Vertex Pharmaceuticals shrank in the period.
Below we take a closer look at how Incyte, Pharmacyclics and Regeneron Pharmaceuticals have fared and what analysts expect from them.
This Wilmington, Delaware-based biopharmaceutical company saw short interest surge about 66 percent to more than 8.34 million shares, the greatest number of shares short so far this year. That represents about five percent of the float. The days to cover rose to more than three during the period.
The company focuses on the discovery, development and commercialization of proprietary small molecule drugs primarily for oncology and inflammation. The current quarter is expected to be its first profitable one in at least four quarters. Incyte has a market capitalization of more than $8 billion.
Of the 16 analysts who follow the stock and were surveyed by Thomson/First Call, 13 recommend buying shares, with six of them rating the stock at Strong Buy. The mean price target, or where analysts predict the share price will go, is around 21 percent higher than the current share price.
The share price is more than 10 percent higher than a month ago, but it is south of the 50-day moving average. Over the past six months, the stock has outperformed not only larger competitors Amgen and Celgene, but the broader markets as well.
Short interest in this clinical-stage biopharmaceutical company rose more than 14 percent during the period to around 3.10 million shares. That is the greatest number of shares sold short in at least a year, and the days to cover was more than two. Short interest was around five 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. Revenue is expected to grow more than 50 percent in the current quarter and the next. The $7 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. Their mean price target represents more than 36 percent potential upside, relative to the current share price. Note though that the consensus target is less than the 52-week high reached back in February.
Shares have found support near $90 over the past few weeks. The 50-day and 200-day moving averages formed a death cross in late April. Over the past six months, Pharmacyclics has underperformed larger competitor Merck, and the broader markets as well.
This Tarrytown, New York-based biotech company saw short interest swell more than 13 percent to around 5.25 million shares, on an average daily volume that almost doubled from the previous period. The number of shares sold short in at the end of April represented more than 17 percent of the float.
Regeneron develops, manufactures and commercializes medicines for the treatment of serious medical conditions. Analysts are looking for greater than 60 percent growth in per-share earnings in the current quarter and the full year. The company has a market cap of more than $27 billion. Its operating margin is better than the industry average.
Five of the 20 polled analysts rate the stock at Strong Buy, and eight more also recommend buying shares. A move from the current share price to the mean price target would represent a more than 19 percent gain for shareholders. That consensus target is less than the 52-week high, however.
The share price is down almost five percent from a month ago, taking back much of the year-to-date gain. It is below both the 50-day and 200-day moving averages. Over the past six months, the stock has outperformed peer Amgen but underperformed Novartis and the broader markets.
At the time of this writing, the author had no position in the mentioned equities.
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