Short interest in most of the leading biotech and emerging pharmaceutical companies declined between the February 14 and February 28 settlement dates. But Biogen Idec (NASDAQ: BIIB), BioMarin Pharmaceutical (NASDAQ: BMRN) and Medivation (NASDAQ: MDVN) bucked that trend.
Short interest in Gilead Sciences and Pharmacyclics was about the same as in the previous period.
However, short sellers shied away from Alexion Pharmaceuticals, Amgen, Celgene, Dendreon, Illumina, Incyte, Questcor Pharmaceuticals, Regeneron Pharmaceuticals and Vertex Pharmaceuticals in the final weeks of the month.
Below we take a closer look at how Biogen Idec, BioMarin Pharmaceutical and Medivation have fared and what analysts expect from them.
This S&P 500 component saw its short interest rise more than four percent during the period to more than 2.98 million shares. That was the greatest number of shares short since the end of November, and it represented more than one percent of the float. The days to cover rose to more than two.
The company develops and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders, and in mid-February it named a new chairman of the board. The market capitalization is more than $79 billion, and the long-term earnings per share (EPS) growth forecast is more than 18 percent.
The consensus recommendation of the 28 analysts who follow the stock that were surveyed by Thomson/First Call is to buy shares. But their mean price target, or where they expect the share price to go, is only marginally higher than the current share price, as well as less than the 52-week high.
The share price is up more than five percent in the past month but more than 20 percent higher year to date. It is above the 50-day and 200-day moving averages. Over the past six months, Biogen Idec's stock has outperformed not only the broader markets, but larger competitor Pfizer as well.
After surging more than 46 percent in the previous period, the number of shares sold short in this biopharmaceutical company rose another 7.6 percent to total more than 6.78 million. That represented less than five percent of the total float. The days to cover was more than three.
BioMarin offerings include Naglazyme and Kuvan. This San Rafael, California-based company now has a market cap of more than $11 billion. It posted a deeper-than-expected net loss during the period and got an FDA nod for its Vimizim. The long-term EPS growth forecast is about 25 percent.
Nine of the 23 analysts surveyed rate the stock at Strong Buy, and seven more also recommend buying shares. Their mean price target is more than eight percent higher than the current share price. That consensus target would be a new multiyear high.
Shares are trading about nine percent higher than a month ago, though they have pulled back more than seven percent from a recent 52-week high. The share price is still north of the 50-day and 200-day moving averages. BioMarin has outperformed competitor Amicus Therapeutics over the past six months.
Short interest in this San Francisco-based company grew more than 10 percent late in the month to around 3.47 million shares. That was the second highest number of shares sold short so far this year, and it represents less than five percent of the float. The days to cover dropped to less than two.
This biopharmaceutical company offers treatments for prostate cancer. The more than $5 billion market cap company beat earnings expectations in its most recent report, but it also offered weak guidance. Note that both its return on equity and its operating margin are in negative territory.
Of the 20 surveyed analysts, eight rate the stock at Strong Buy, and eight more also recommend buying Medivation shares. They see plenty of room for shares to run, as their mean price target is more than 24 percent higher than the current share price. That would be a new multiyear high.
However, note that the share price is more than 14 percent lower than a month ago, though still up more than nine percent year to date. It has dropped below the 50-day moving average. Over the past six months, the stock has outperformed competitor Dendreon, as well as the S&P 500.
At the time of this writing, the author had no position in the mentioned equities.
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