Gilead Sciences Bucks Trend In Biotech Short Interest

While Gilead Sciences, Inc. GILD stood out among the leading biotechs and emerging pharmaceuticals as the only one that saw a notable rise in short interest between the November 14 and November 28 settlement dates. During that time, short sellers fled from Amgen, Inc. AMGN and Celgene Corporation CELG.

Below is a closer look at how Amgen, Celgene and Gilead Sciences have fared and what analysts expect from them.

Related Link: 3 Biotech ETFs Rally On Merger News

Amgen

This biotechnology medicines company saw short interest retreat almost 12 percent to more than 8.51 million shares, the lowest number of shares sold short since last July, and around 1 percent of the float. The days to cover rose to about three during the period.

The company develops and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses. It opened a manufacturing facility in Singapore during the period. Amgen has a market capitalization of less than $129 billion and a dividend yield near 1.4 percent.

Of the 23 analysts surveyed by Thomson/First Call, 13 recommend buying shares, with the rest rating the stock at Hold. Their mean price target, or where analysts expect shares to go, is only marginally higher than the current share price. Shares traded higher than that consensus target this week.

Short sellers watched the share price rise more than 5 percent during the two-week short interest period, but have pulled back recently. Shares did hit a new multi-year high this past Monday. Over the past six months, the stock has outperformed Gilead Sciences and the S&P 500.

Celgene

The short interest in this biopharmaceutical company retreated more than 10 percent to more than 11.16 million shares. That was more than 1 percent of the total float, as well as the smallest number of shares sold short since last March. It would take more than three days to sell out all short positions.

This maker of therapies to treat cancer and immune-inflammatory related diseases has a market cap of more than $94 billion. Its psoriasis treatment got good news from European regulators in November. The long-term EPS growth forecast is more than 25 percent.

All but three of the 26 analysts surveyed recommend buying shares, with 11 of them rating the stock at Strong Buy. However, the share price has overrun the mean price target, which means analysts see no further upside at this time. The street-high price target is about 15 percent higher than the share price, though.

The stock rose about 9 percent during the two-week period, and shares are up another 2 percent since then, reaching a multi-year high this week. Celgene has not only outperformed the other two biotech stocks featured here over the past six months, but the NASDAQ and S&P 500 as well.

Related Link: Great News For Biogen, But What's Next For The Stock?

Gilead Sciences

Short interest in this biopharmaceutical company has grown in the past three periods to around 56.57 million shares. That was the greatest number of shares short since September, as well as almost 4 percent of the float. It would take more than three 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. Its Hepatitis C drug received marketing clearance in the EU in the period. It has a market cap of more than $159 billion. The return on equity is about 69 percent.

Of the 26 polled analysts, 10 rate the stock at Strong Buy, and 13 more also recommend buying shares. They see plenty of room for shares to run, as their mean price target is more than 16 percent higher than the current share price. That consensus target would be a new multi-year high.

During the short interest period, shares initially rose, but ended up down less than 2 percent. Shares have gained more than 4 percent since, rising above the 50-day moving average again. The stock has outperformed the broader markets in the past six months but underperformed Amgen and Celgene.

Other biotech stocks that saw declines in the number of shares sold short in the latter weeks of the month include:

• Alexion Pharmaceuticals, Inc.
• BioMarin Pharmaceutical Inc.
• Illumina, Inc.
• Medivation Inc
• Vertex Pharmaceuticals Incorporated

Short interest in Biogen Idec Inc and Incyte Corporation was little changed from the previous settlement date.

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