Short Sellers Grow More Selective in Big Pharma

Health and Healthcare

Published: September 25, 2019 9:20 am

Last Updated: January 30, 2020 3:28 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 actually can 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 13 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 58.54 million shares from the previous 58.89 million. The stock was trading at $36.01 Wednesday morning, within a 52-week range of $33.97 to $46.47.

The number of Merck & Co. Inc. (NYSE: MRK) shares short decreased to 17.98 million from 20.13 million in the previous period. Its shares were trading at $83.60, in a 52-week range of $66.10 to $87.35.

Bristol-Myers Squibb Co. (NYSE: BMY) saw its short interest grow to 145.76 million shares from the previous reading of 144.02 million. Shares traded at $50.01, in a 52-week trading range of $42.48 to $63.69.

The number of shares short in AbbVie Inc. (NYSE: ABBV) increased to 54.26 million from the previous 52.54 million. The stock was trading at $72.95, and its 52-week range is $62.66 to $96.60.

Eli Lilly and Co.’s (NYSE: LLY) short interest decreased to 13.51 million shares from the previous 14.16 million. The stock was trading at $113.25. The 52-week range is $104.17 to $132.13.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest was 77.21 million, up from the previous level of 68.59 million. Shares were trading at $7.04, in a 52-week range of $6.07 to $24.47