Major Pharma Scares Off Short Sellers

Health and Healthcare

Published: February 12, 2019 9:35 am

Last Updated: January 31, 2020 12:43 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 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 January 31 short interest data have been compared with the previous figures, and short interest in most of these selected pharmaceutical stocks decreased.

Short interest in Pfizer Inc. (NYSE: PFE) decreased to 42.75 million shares from the previous 46.87 million. The stock was trading at $41.68 Tuesday morning, within a 52-week range of $34.32 to $46.47.

The number of Merck & Co. Inc. (NYSE: MRK) shares short fell to 34.56 million from 42.22 million in the previous period. Its shares were trading at $76.71, in a 52-week range of $52.83 to $80.19.

Bristol-Myers Squibb Co. (NYSE: BMY) short interest jumped to 57.53 million shares from the previous reading of 48.40 million. Shares traded at $50.10, in a 52-week trading range of $44.30 to $70.05.

The number of shares short in AbbVie Inc. (NYSE: ABBV) decreased to 25.31 million from the previous 28.08 million. The stock was trading at $79.77, and its 52-week range is $75.77 to $122.00.

Eli Lilly and Co.’s (NYSE: LLY) short interest decreased to 28.03 million shares from the previous 30.27 million. The stock was trading at $118.01. The 52-week range is $74.51 to $121.84.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest decreased to 24.52 million from the previous level of 37.49 million. Shares were trading at $18.82, in a 52-week range of $14.59 to $25.96.