EpiPen producer Mylan NV (NASDAQ:MYL) yesterday rallied more than 7% on Food and Drug Administration (FDA) approval for the company's generic version of Advair. As such, Mizuho this morning raised its price target to $32 from $28. The stock is trading lower today, though -- down 2.8% at $29.96, at last check -- and MYL just flashed a historically bearish signal.
Specifically, the security just came within one standard deviation of its 60-day moving average, after a lengthy stretch below the trendline. Over the past couple of years, there have been five similar run-ups, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. After these signals, MYL stock averaged a one-month loss of 9.3%, and was lower each time. A similar move from current levels would put the security back at the $27.41 area.
Mizuho isn't the only analyst waxing optimistic on the stock. Of the 14 analysts following Mylan, seven consider it a "strong buy," and two say "buy." There are only five "hold" ratings and not a single "sell." What's more, the consensus 12-month price target of $41.60 represents a 39.2% premium to current levels. Should the stock extend its long-term descent, a round of downgrades could create even more headwinds.
Plus, short interest fell 22.06% in the past two reporting periods, to 6.83 million shares, and now only accounts for 1.3% of the stock's available float. This points to little cash on the sidelines to fuel big gains for MYL.
Options traders, on the other hand, have been more bearish than usual. MYL currently sports a 10-day put/call volume ratio of 0.70 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 81st percentile of its annual range. This suggests that while traders have bought to open more MYL calls than puts on an absolute basis, bearish bets are being initiated at a quicker-than-usual clip.