Market Overview

Short Interest In Baxter International And Celator Pharmaceuticals Doubles

Short Interest In Baxter International And Celator Pharmaceuticals Doubles
  • Short interest in a number of stocks surged in the most recent settlement period.
  • Two healthcare stocks were among those leading that trend in the final weeks of April.
  • Shares of both rose in the period, but only one held on to that gain.

With the markets surging last month and the S&P 500 hitting new 52-week highs, many short sellers have become more cautious. Yet, two healthcare stocks – one a medical instruments supplier and the other a biotech company – in particular caught the eye of some short sellers in that time. Baxter International Inc (NYSE: BAX) and Celator Pharmaceuticals Inc (NASDAQ: CPXX) each saw the number of their shares sold short more than double between the April 15 and April 29 settlement dates.

Of course, these companies were not alone in seeing a short interest surge in the latter two weeks of last month. Others include Columbia Pipeline, First Majestic Silver, Krispy Kreme Doughnuts, Repros Therapeutics, StemCells and Viacom. On the other hand, short sellers fled in droves from the likes of Liberty Media and Newell Brands in that time.

Related Link: Icahn Filing Shows Record Net Short Exposure, High Yield Outflows Break Record

Below is a quick look at how Baxter and Celator have fared recently and what analysts expect from them.

Baxter International

This Illinois-based provider of renal and hospital products saw its short interest spike by more than 158 percent to around 57.44 million shares, which is 10.5 percent of the total float, in the final weeks of the month. The average daily volume also spiked, from around 7 million to more than 12 million, during the period and so it would take more than four days to cover all short positions.

Baxter was said to be one of a few firms interested in acquiring an India-based generic pharmaceuticals firm. The consensus recommendation of analysts surveyed by Thomson/First Call remains to Hold Baxter shares, as it has been for at least three months. Their mean price target suggests that they see about 5 percent upside to the current share price, and that target would be a new 52-week high.

Short sellers watched the shares rise more than 3 percent during the two-week short interest period. The stock has climbed almost 5 percent further since that time and reached a new 52-week high earlier this week. The share price is up more than 21 percent year-to-date, compared to gain of about 1 percent for the S&P 500. But, note that the stock is down more than 33 percent from a year ago.

Related Link: Sohn Strategy: Go Long The Shorts, Short The Longs

Celator Pharmaceuticals

The number of shares sold short in this clinical-stage biopharmaceutical company focused on treatments for cancer jumped around 125 percent during the two weeks to more than 3.77 million. That was 14.5 percent of the total float, and it also was by far the highest level of short interest in the past 52 weeks. Note that the average daily volume nearly doubled as well, which kept the days to cover at around one.

Celator announced positive trial results from its acute myeloid leukemia treatment Vyxeos. All five of the analysts polled recommend buying shares, with one of them rating the stock at Strong Buy. A move to the analysts' mean price target would be a gain of about 28 percent for the shareholders. That consensus target also would be an all-time high for the shares.

Early in the short interest period, shares rose more than 7 percent, reaching a new 52-week high. However, they had given up virtually all of that gain by the settlement date, and they have retreated further since that time. Note that Celator shares still are up more than 733 percent year-to-date, much of that gain in March on the news of previous Vyxeos trial results.

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

Latest Ratings for BAX

Mar 2020Morgan StanleyMaintainsEqual-Weight
Mar 2020StifelUpgradesHoldBuy
Mar 2020Deutsche BankMaintainsBuy

View More Analyst Ratings for BAX
View the Latest Analyst Ratings


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