Short Sellers Grow More Selective on Major Pharma Stocks

Health and Healthcare

Published: September 26, 2018 8:50 am

Last Updated: January 11, 2020 5:19 pm

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 White House has promised reforms in the health care sector, such as changing the bidding process for drugs and shortening the FDA approval process. It is yet to be seen how much headway it can actually make with these reforms.

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 September 14 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) increased to 50.59 million shares from the previous 48.51 million. The stock was last seen trading at $43.79, within a 52-week range of $33.20 to $44.46.

The number of Merck & Co. Inc. (NYSE: MRK) shares short rose to 21.39 million from 19.91 million in the previous period. Its shares were trading at $70.65, in a 52-week range of $52.83 to $71.58.

Bristol-Myers Squibb Co. (NYSE: BMY) short interest rose slightly to 14.32 million shares from the previous reading of 14.12 million. Shares were last seen at $61.82, in a 52-week range of $49.96 to $70.05.

The number of shares short in AbbVie Inc. (NYSE: ABBV) decreased slightly to 31.37 million from the previous 31.44 million. The stock was trading at $93.78, and its 52-week range is $83.19 to $125.86.

Eli Lilly and Co.’s (NYSE: LLY) short interest shrank to 11.05 million shares from the previous 12.64 million. The stock was trading at $105.70. The 52-week range is $73.69 to $107.84.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest fell to 35.79 million from the previous level of 38.79 million. Shares were trading at $23.27, in a 52-week range of $10.85 to $25.96.