Biotech Short-Sellers Prefer Amgen To Gilead Sciences
Some of the biggest swings in short interest among the leading biotechs and emerging pharmaceuticals between the May 29 and June 15 settlement dates happened to Amgen, Inc. (NASDAQ: AMGN), Gilead Sciences, Inc. (NASDAQ: GILD) and Illumina, Inc. (NASDAQ: ILMN).
Let's take a quick look at how these three stocks have fared recently and what analysts expect from them. That is followed by a glance at short interest moves in other leading biotech stocks.
See also: A Look At Short-Sellers' Latest Picks
This California-based biotechnology medicines company saw short interest rise more than 12 percent to about 9.67 million shares, or more than 1 percent of float. That ended a four-period streak of falling short interest. At the current daily volume, it would take more than three days to cover all short positions.
The company develops and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses. Amgen was among biotech stocks affected by a negative market tone in the period. Amgen has a market capitalization near $120.1 billion and a dividend yield of about 2.0 percent.
Half of the 20 analysts surveyed by Thomson/First Call recommend buying shares, with the rest rating the stock at Hold. Their mean price target, or where analysts expect shares to go, is about 12 percent higher than the current share price. That consensus target would be a new multiyear high.
The share price remained relatively flat during the two-week short interest period. However, the shares have climbed about 2 percent since, but are still down fractionally since the beginning of the year. Over the past six months, the stock has underperformed competitor Gilead Sciences and the Nasdaq.
Short interest in this biopharmaceutical company pulled back about 18 percent to almost 35.82 million shares. That was less than 3 percent of the float, as well as the smallest number of shares short in at least a year. It would take less than four days to close out all of the short positions.
Gilead Sciences focuses on human therapeutics for the treatment of life-threatening diseases such as HIV infection and pulmonary arterial hypertension. In June its president talked up the company's prospects. It has a market cap of more than $175 billion. The dividend yield is about 1.4 percent.
Of the 22 polled analysts, five rate the stock at Strong Buy, and 14 more also recommend buying shares. Note that a move to the mean price target would be a gain of only about 2 percent for shares, and also that the stock traded higher than that last week, when it hit a new 52-week high.
During the short interest period, shares rose about 5 percent, and they have gained another 2 percent since. The stock is up almost 23 percent in the past six months, outperforming not only the broader markets in that time, but the likes of other biotech giants Amgen and Celgene as well.
Short interest in this San Diego-based company surged more than 22 percent in the first weeks of the month to more than 4.42 million shares, or a little more than 3 percent of the float. The number of shares sold short had not been above 4 million since last July. The days to cover was less than four.
Illumina makes life science tools and integrated systems for genetic analysis. Analysts are looking for this more than $31 billion market cap company to post double-digit percentage revenue growth this year and the next. But note that its price-to-earnings (P/E) ratio is much greater than the industry average.
Of the 26 analysts polled, 10 rate the stock at Strong Buy, and eight more also recommend buying Illumina shares. They see some head room for the stock, as their mean price target is about 6 percent higher than the current share price. That consensus target would be a new multiyear high.
During the two-week short interest period, shares climbed less than 4 percent, and they ended last week more than 14 percent higher year to date. Over the past six months, the stock has outperformed the broader markets and Amgen, but underperformed Gilead Sciences.
The number of shares short in Acadia Pharmaceuticals, Biogen, BioMarin Pharmaceutical, Seattle Genetics and Vertex Pharmaceuticals had more modest bumps in early June, while Alexion Pharmaceuticals also saw its short interest rise handily.
However, short sellers shied away from Celgene, Incyte, Juno Therapeutics and Medivation in that the two-week period.
At the time of this writing, the author had no position in the mentioned equities.
Image credit: Jeffrey Beall, Wikimedia
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