3 Biotechs Breaking Out Big

Drugmakers Calithera Biosciences Inc (NASDAQ:CALA), Evoke Pharma Inc (NASDAQ:EVOK), and Pacific Biosciences of California (NASDAQ:PACB) are on fire today

by Alex Eppstein

Published on Oct 7, 2015 at 2:59 PM
Updated on Jun 24, 2020 at 10:16 AM

It's been an up-and-down day for the broader market, yet the biotech sector has been charting a path steadily higher. Among the outperforming stocks are Calithera Biosciences Inc (NASDAQ:CALA), Evoke Pharma Inc (NASDAQ:EVOK), and Pacific Biosciences of California (NASDAQ:PACB). Here's a closer look at this trio of equities, as well as Wall Street's expectations.

CALA has popped almost 3% this afternoon to trade at $7.30. This represents a change of pace for a stock that's plummeted 78% since touching a mid-December record peak of $33.48.

Short sellers have been piling on amid this long-term swoon. In fact, nearly 47% of CALA's float is dedicated to short interest, representing 13 days' worth of activity, at typical trading volumes. Conversely, all three analysts tracking the shares rate them a "strong buy." Should CALA resume its withstanding trend south, a round of downgrades could ensue.

EVOK was last seen 23.6% higher at $4.08, lifted by the company's projection that its current cash resources can likely support operations for the next year. Separately, Noble Financial initiated coverage on the stock with a "buy" rating, providing another upward catalyst.

The bullish brokerage attention is par for the course. Heading into today, 100% of analysts considered EVOK worthy of a "strong buy" endorsement. Short sellers are less convinced -- as evidenced by the fact short interest nearly tripled during the last two reporting periods.

Looking at the charts, short sellers may have a point. Even after today's huge gains, EVOK is 31% lower on the year, and has seen recent spikes -- including the current one -- contained by its descending 80-day moving average.

Last but not least, Illumina, Inc. (NASDAQ:ILMN) rival PACB has jumped over 20% to hover near $7.65 -- bringing it within striking distance of its year-to-date flatline. The surge has intraday option volume running at five times the typical clip -- led by the now in-the-money November 7.50 call.

With PACB tentatively scheduled to report earnings within the next couple weeks, option bulls may be rolling the dice on post-earnings gains. Historically speaking, though, the shares have tended to fall in the session subsequent to the reports -- posting negative returns in five of the past eight quarters. With 28% of PACB's float sold short, it's also possible call buyers may be short sellers hedging against extended upward momentum. 

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