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Amgen, Celgene Buck Short Interest Trend In Biotech Stocks

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Amgen, Celgene Buck Short Interest Trend In Biotech Stocks
  • Short interest in many of the leading biotech stocks shrank in the most recent period.
  • However, two of the largest biotech companies bucked that trend in late January.
  • Credit Suisse was bullish on both of them during the short interest period.

While short sellers shied away from many of the leading biotech and emerging pharmaceutical stocks, between the January 15 and January 29 settlement dates, two of the industry's most prominent stood apart. The number of Amgen, Inc. (NASDAQ: AMGN) and Celgene Corporation (NASDAQ: CELG) shares sold short grew by more than 15 percent by the end of the month.

Also in the period, Alexion Pharmaceuticals, Baxalta, Biogen, BioMarin Pharmaceutical, Gilead Sciences, Illumina, Incyte, Medivation and Opko Health saw declines in their short interest. Yet, in Intrexon, Seattle Genetics and Vertex Pharmaceuticals there was a modest rise in shares short between the settlement dates.

Here we take a quick look at how Amgen and Celgene have fared recently and what analysts expect from them.

Amgen

This biotechnology company focused on oncology, hematology, inflammation and other areas saw its short interest rise more than 15 percent to more than 10.41 million shares, or 1.4 percent of float in the final weeks of the month. Note that it was the fifth straight period of rising short interest. It would take about two days to cover all short positions.

Credit Suisse initiated coverage of Amgen with an Outperform rating in the period. The consensus analyst recommendation now is to buy the shares, and a move to their mean price target would be a gain of more than 21 percent for the shares.

The share price ended the two-week short interest period about where it began, despite being up 3 percent and down more than 4 percent during that time. The Nasdaq grew less than 2 percent by the end of January.

See also: Chardan: Sell Regeneron After Sanofi Drops Patent Infringement Bombshell

Celgene

The number of shares sold short in this biopharmaceutical company focused on therapies to treat cancer and inflammatory diseases jumped nearly 16 percent late during the two weeks to almost 10.50 million, which was 1.3 percent of the total float. That was highest level of short interest since last November, and the days to cover was more than one.

Credit Suisse recently called Celgene the "best in class." The consensus analyst recommendation is to buy Celgene shares, and their mean price target signals about 35 percent upside potential.

During the two-week settlement period, short sellers watched shares of Celgene rise more than 5 percent, only to end up about 4 percent lower by the end of the month. The stock has recovered a bit since then, though.

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

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