Short Sellers Pull Back on Major Pharma -- With 1 Big Exception

Investing

Published: November 12, 2018 10:10 am

Last Updated: January 11, 2020 3:03 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 October 31 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 46.55 million shares from the previous 50.35 million. The stock was last seen trading at $44.40, within a 52-week range of $33.20 to $45.81.

The number of Merck & Co. Inc. (NYSE: MRK) shares short jumped massively, to 74.75 million from 17.35 million in the previous period. Its shares were trading at $75.00, in a 52-week range of $52.83 to $75.99.

Bristol-Myers Squibb Co. (NYSE: BMY) short interest dropped to 11.36 million shares from the previous reading of 12.93 million. Shares were last seen at $53.10, in a 52-week trading range of $46.94 to $70.05.

The number of shares short in AbbVie Inc. (NYSE: ABBV) decreased to 25.44 million from the previous 32.65 million. The stock was trading at $89.30, and its 52-week range is $77.50 to $125.86.

Eli Lilly and Co.’s (NYSE: LLY) short interest fell to 11.19 million shares from the previous 15.22 million. The stock was trading at $113.50. The 52-week range is $73.69 to $116.61.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest increased slightly to 32.81 million from the previous level of 32.61 million. Shares were trading at $23.35, in a 52-week range of $10.85 to $25.96.

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