Short Interest Rises in Gilead Sciences, Onyx Pharmaceuticals (BIIB, GILD, ONXX)

Among biotech and emerging pharmaceutical companies, Gilead Sciences GILD and Onyx Pharmaceuticals ONXX saw the most significant rises in short interest between the June 14 and June 28 settlement dates.

The number of shares sold short in Amgen AMGN, Arena Pharmaceuticals ARNA, Celgene CELG, Pharmacyclics PCYC, Regeneron Pharmaceuticals REGN and VIVUS VVUS also grew somewhat in that period.

But Biogen Idec BIIB saw the largest percentage decrease in short interest.

Short sellers also shied away from Alexion Pharmaceuticals ALXN, Dendreon DNDN, Illumina ILMN and Vertex Pharmaceuticals VRTX during that time.

Here we take a closer look at how Biogen Idec, Gilead Sciences and Onyx Pharmaceuticals have fared and what analysts expect from them.

Biogen Idec

This S&P 500 component saw short interest decline about seven percent during the period to around 2.32 million shares, after falling almost 10 percent in the previous period. The number of shares sold short represented about one percent of the float. The days to cover remained a little more than one.

The company develops and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders. Biogen Idec beat earnings estimates in its most recent quarter. The company has a market capitalization of more than $52 billion, and the return on equity is about 22 percent. The long-term earnings per share (EPS) growth forecast is more than 19 percent.

The consensus recommendation of the 29 analysts polled by Thomson/First Call is to buy shares. Their mean price target, or where they expect the share price to go, indicates about six percent upside potential. But note that the consensus target is less than the multiyear high reached in May.

The share price is less than two percent lower than a month ago, but still up more than 46 percent year-to-date. Over the past six months, Biogen Idec stock has outperformed that of larger competitor Pfizer PFE, as well as the broader markets.

Gilead Sciences

Short interest in this biopharmaceutical company grew about eight percent to 56.90 million shares, ending a four-period slide in the number of shares sold short. Days to cover was more than five, for the first time since March. Short interest is less than four percent of the company's float.

Gilead Sciences focuses on human therapeutics for the treatment of life threatening diseases such as HIV infection and pulmonary arterial hypertension. The company released Idelalisib trial data in June. The company has a market cap of about $85 billion. The return on equity is almost 32 percent and the operating margin is better than the industry average.

All but four of the 29 polled analysts recommend buying shares, with 11 of them rating the stock at Strong Buy. Their mean price target is more than 15 percent higher than the current share price. That target would be a new multiyear high.
Shares are up more than five percent in the past month and more than 47 percent higher year-to-date. Over the past six months, the stock has outperformed larger competitors Pfizer and GlaxoSmithKline GSK, as well as the broader markets.

Onyx Pharmaceuticals

Short interest in this biopharmaceutical company increased almost 13 percent to total more than 6.61 million shares. That was the greatest number of shares sold short in the past year. Short interest was more than nine percent of the company's float at the end of June. Days to cover rose to more than six.

Onyx develops and commercializes therapies that target the molecular mechanisms that cause cancer. This South San Francisco-based company now has a market cap of more than $9 billion. It has posted smaller-than-expected net losses in recent quarters. The long-term EPS growth forecast is more than 44 percent, but the return on equity is in the red.

However, the consensus recommendation of the analysts surveyed is to buy shares of Onyx, and it has been for at least three months. But the share price has overrun the mean price target, meaning the analysts see not upside potential at this time.

The stock soared after Onyx rejected a takeover bid from Amgen, and the share price is now about 73 percent higher year-to-date. Because of the surge, Onyx has outperformed larger competitors Merck MRK and Novartis NVS, as well as the broader markets, over the past six months.