Big Pharma Short Interest Backs Off, With One Huge Exception

Health and Healthcare

Published: March 12, 2019 8:35 am

Last Updated: January 30, 2020 11:36 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 February 28 short interest data have been compared with the previous figures, and short interest in most of these selected pharmaceutical stocks decreased, with one major exception.

Short interest in Pfizer Inc. (NYSE: PFE) decreased to 138.18 million shares from the previous 155.95 million. The stock was trading at $41.50 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 39.66 million from 40.59 million in the previous period. Its shares were trading at $80.87, in a 52-week range of $52.83 to $81.12.

Bristol-Myers Squibb Co. (NYSE: BMY) short interest jumped to 74.11 million shares from the previous reading of 60.97 million. Shares traded at $50.90, in a 52-week trading range of $44.30 to $68.22.

The number of shares short in AbbVie Inc. (NYSE: ABBV) decreased to 21.88 million from the previous 22.19 million. The stock was trading at $78.08, and its 52-week range is $75.77 to $121.45.

Eli Lilly and Co.’s (NYSE: LLY) short interest increased massively to 103.66 million shares from the previous 35.27 million. The stock was trading at $123.50. The 52-week range is $74.51 to $130.51.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest decreased to 20.67 million from the previous level of 23.48 million. Shares were trading at $15.78, in a 52-week range of $14.59 to $25.96.