Small Interest Rises As Biotechs Fall (AMGN, CELG, DNDN)
In a period when many biotech stocks were slipping, short sellers moved on many of the leading biotech and emerging pharmaceuticals between the March 14 and March 31 settlement dates.
Online, April 10, 2014 (Newswire.com) - But Amgen (NASDAQ: AMGN [FREE Stock Trend Analysis]), Celgene (NASDAQ: CELG) and Dendreon (NASDAQ: DNDN) were among those that bucked the trend.
The number of Alexion Pharmaceuticals, Biogen Idec, BioMarin Pharmaceutical, Gilead Sciences, Incyte, Pharmacyclics, Questcor Pharmaceuticals, Vertex Pharmaceuticals shares sold short in the period increased.
However, short sellers also retreated somewhat from Illumina, Medivation, Regeneron Pharmaceuticals and Seattle Genetics in the final weeks of the month.
Below we take a closer look at how Amgen, Celgene and Dendreon have fared and what analysts expect from them.
Amgen
This California-based biotechnology medicines company saw short interest decline less than five percent to 10.59 million shares, or about the same number of shares short as at the beginning of the year. That represents more than one percent of the float. The days to cover fell to less than three during the period.
The company develops and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses. It announced during the period that a cholesterol fighting drug met its goal. Amgen has a market capitalization of more than $90 billion and a dividend yield near 2.0 percent.
Of the 27 analysts who follow the stock that were surveyed by Thomson/First Call, 13 recommend buying shares, and the rest rate it at Hold. The mean price target, or where analysts predict the share price will go, is about 10 percent higher than the current share price.
The share price is about six percent lower than a month ago, but still marginally higher than at the beginning of the year. It is south of the 50-day moving average. Over the past six months, the stock has underperformed competitor Teva Pharmaceutical, but it has narrowly outperformed the broader markets.
Celgene
The short interest in this biopharmaceutical company fell about six percent to more than 5.75 million shares. That was more than one percent of the total float, as well as the second largest number of shares sold short in almost a year. It would take less than two days to close out all short positions.
This New Jersey-based maker of therapies to treat cancer and immune-inflammatory related diseases has a market cap of almost $60 billion. Analysts predict double-digit earnings and revenue growth for the current quarter. The company's long-term earnings per share growth forecast is more than 24 percent.
Out of 28 analysts surveyed, 13 rate the stock at Strong Buy and 12 others also recommend buying shares. They believe the stock has plenty of headroom, as their mean price target is more than 23 percent higher than the current share price. That target would be a new multiyear high.
Shares have retreated more than 12 percent in the past month, falling below the 200-day moving average for the first time in more than a year. Over the past six months, the stock has underperformed not only larger competitor Johnson & Johnson but the broader markets as well.
Dendreon
Short interest in this biotechnology company focused on cancer treatment fell more than five percent in late March to around 42.13 million shares. That was the smallest number of shares sold short in the past year, but it was still more than 27 percent of the float, and the days to cover was more than 13.
This Seattle-based company is the maker of Provenge. The less than $450 million market cap company posted a smaller-than-expected fourth-quarter loss and announced plans to sell Provenge in Europe. Its return on equity is more than 217 percent, but note that the operating margin is in the red.
The analysts' consensus recommendation is to hold Dendreon shares, and it has been for at least three months. Their mean price target indicates they see more than eight percent potential upside, relative to the current share price. However, shares traded higher than that in early March.
The share price is down more than four percent in the past month, but it is still more than 10 percent higher than six months ago. Over the past six months, Dendreon has outperformed larger competitor Sanofi , but it has underperformed the S&P 500 in that time.