Health and Healthcare

Major Pharma Continues to See Significant Drop in Short Interest

Chris Lange

Published: September 13, 2016 7:25 am

Last Updated: January 13, 2020 3:39 am

The short interest data have been released for the August 31 settlement date. Pharmaceutical companies usually are involved in a lengthy process in getting their drug candidates to market through clinical trials. There is a fair amount of risk involved, should a study come back negative or a candidate not be approved. Conversely, if a drug is approved or passes a clinical trial, there can be big upside.

Drug prices may be under pressure due to the campaign rhetoric and under scrutiny, but if generic drugs are going to keep increasing in market share of existing drugs, then there would seem to be a reason for owning major pharmaceuticals.

The August 31 short interest data have been compared with the previous figures, and for most of the selected pharmaceutical stocks, short interest has significantly decreased.

Keep in mind that short sellers betting against big pharma are taking on an added risk. They have to pay out the ongoing high dividends on top of the cost of borrowing the shares.

Pfizer Inc. (NYSE: PFE) saw its short interest decrease only slightly to 39.45 million shares from the previous 39.63 million. Shares of Pfizer closed Monday at $34.65, within a 52-week trading range of $28.25 to $37.39.

Merck & Co. Inc. (NYSE: MRK) had a fall in short interest to 30.01 million shares, from 31.29 million in the previous period. Its shares closed Monday at $63.19, in a 52-week range of $47.97 to $64.00.

Teva Pharmaceutical Industries Ltd.‘s (NYSE: TEVA) short interest decreased to 9.83 million shares. The previous level was 13.80 million. Shares closed Monday at $51.56, in a 52-week range of $48.01 to $66.55.

Bristol-Myers Squibb Co. (NYSE: BMY) saw its short interest increase to 12.34 million shares from the previous reading of 9.65 million. Shares closed Monday at $56.32, within a 52-week range of $55.02 to $77.12.

AbbVie Inc.‘s (NYSE: ABBV) short interest fell to 39.05 million shares, compared to the previous 48.00 million. Shares of AbbVie closed Monday at $64.08, in a 52-week trading range of $45.45 to $68.12.