Skepticism Mounts On Volatile Valeant Pharmaceuticals Intl Inc (VRX)

Short interest has surged on target Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

by Josh Selway

Published on Apr 12, 2016 at 3:35 PM
Updated on Jun 24, 2020 at 10:16 AM

Short sellers continue to target Valeant Pharmaceuticals Intl Inc (NYSE:VRX), even though the biotech stock has already dropped 88% since its all-time high of $263.81 in August. In the latest two-week reporting period alone, short interest on VRX increased by 56.1% to 18 million shares -- the most since early August. However, there's still plenty of room on VRX's bearish bandwagon, considering it would take short sellers less than one day to cover their positions, at the average daily pace of trading. 

Meanwhile, it looks as if options traders have been betting on a rebound. VRX's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 2.26 -- in the 83rd percentile of its annual range. In short, call buying has been extremely popular lately. Given the massive increase in short selling, though, some of this could be indicative of shorts hedging their bearish bets.

Elsewhere, while the majority of analysts are skeptical of the stock, there's still a handful of holdouts. Specifically, five brokerage firms still say VRX is a "strong buy," while the average 12-month price target of $63.67 is roughly double the equity's current perch. This morning, though, RBC lowered its price target on VRX to $65 from $69. 

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has found no shortage of ways to make headlines in recent months, as the shares have plummeted. Today, however, VRX has managed a 2.4% gain at $32.09, in light of news that the company has received an extension for filing its annual report. VRX now has until May 31 to release its financial statement. 

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