Short Sellers Grow More Selective on Major Pharma

Health and Healthcare

Published: June 12, 2017 8:55 am

Last Updated: January 12, 2020 11:09 am

Pharmaceutical companies usually are involved in a lengthy process of 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.

The Trump administration has promised reforms in the health care sector, such as changing the bidding process for drugs and shortening the FDA approval process. It has yet to be seen how much headway the White House can actually make with these reforms, even after the House of Representatives vote on Trump’s repeal of Obamacare.

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 May 31 short interest data have been compared with the previous figures, and short interest moves in these selected pharmaceutical stocks were mixed.

Short interest in Pfizer Inc. (NYSE: PFE) decreased to 45.71 million shares from the previous 46.88 million. Its shares were last seen at $32.77, within a 52-week trading range of $29.83 to $37.39.

The number of Merck & Co. Inc. (NYSE: MRK) shares short jumped to 21.18 million from 18.46 million in the previous period. Its shares were trading at $64.39, in a 52-week range of $55.10 to $66.80.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest increased to 30.49 million versus the previous level of 22.63 million. Shares were trading at $30.22, in a 52-week range of $27.60 to $56.44.

Bristol-Myers Squibb Co. (NYSE: BMY) short interest decreased to 18.67 million shares, from the previous reading of 19.23 million. Shares were trading at $53.75, within a 52-week range of $46.01 to $77.12.

The number of shares short in AbbVie Inc. (NYSE: ABBV) increased slightly to 30.39 million, compared to the previous 30.33 million. The stock was trading at $69.67, in a 52-week range of $55.06 to $69.83.

Eli Lilly and Co.’s (NYSE: LLY) short interest increased slightly to 10.18 million shares from the previous 10.03 million. The stock was trading at $81.04. The 52-week range is $64.18 to $86.72.

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