Health and Healthcare

Short Sellers Run for Cover From Major Pharma

Chris Lange

Published: January 26, 2017 9:50 am

Last Updated: January 12, 2020 3:29 pm

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 gains FDA approval or passes a clinical trial, there can be big upside.

Drug prices have been under pressure due to the campaign rhetoric. But now that the election is over and Hillary Clinton — one of the main antagonists of these companies — is no longer running, the pressure has seemingly let up. However, recent comments from Trump have reignited discussion about the industry, suggesting that it may be “getting away with murder.” It’s worth noting that the latest short interest data were compiled before Trump made this comment.

Much more is to be seen from this industry going forward, much less these stocks. 24/7 Wall St has put together a bullish and bearish case for 2017 for the Dow’s health care sector.

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.

The January 13 short interest data have been compared with the previous figures, and short interest moves in these selected pharmaceutical stocks were mostly down.

Short interest in Pfizer Inc. (NYSE: PFE) decreased to 37.93 million shares from the previous 44.49 million. Its shares were last seen at $31.29, within a 52-week trading range of $28.25 to $37.39.

The number of Merck & Co. Inc. (NYSE: MRK) shares short decreased to 15.95 million from 17.31 million in the previous period. Its shares were trading at $61.08, in a 52-week range of $47.97 to $65.46.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest increased slightly to 19.98 million shares, compared to the previous level of 19.47 million. Shares were trading at $33.68, in a 52-week range of $32.11 to $62.84.

The short interest drop in Bristol-Myers Squibb Co. (NYSE: BMY) was to 12.18 million shares, compared to the previous reading of 12.53 million. Shares were trading at $49.55, within a 52-week range of $48.80 to $77.12.

The number of shares short in AbbVie Inc. (NYSE: ABBV) increased slightly to 33.44 million, compared to the previous 33.40 million. The stock was trading at $61.38, in a 52-week range of $51.60 to $68.12.

Eli Lilly and Co.’s (NYSE: LLY) short interest decreased slightly to 10.72 million shares from the previous 10.76 million. The stock was trading at $74.85. The 52-week range is $64.18 to $83.79.

In addition, check out the most shorted NYSE stocks, which included Sprint, Alibaba and Bank of America.