Buzz Stocks: Allergan, Sarepta, and Amazon.com

Today's stocks to watch include AGN, SRPT, and AMZN

Karee Venema
Oct 27, 2014 at 9:15 AM
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Futures are pointed modestly lower ahead of the bell, as traders wait to digest the latest round of quarterly earnings reports. Among specific equities in focus are drug makers Allergan, Inc. (NYSE:AGN) and Sarepta Therapeutics Inc (NASDAQ:SRPT), as well as e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN).

  • AGN is pointed higher in pre-market action, after posting better-than-expected third-quarter earnings results, and lifting its full-year forecast. Separately, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) said it is once again boosting its takeover bid for Allergan, Inc., this time by nearly 14%, to $200 per share. On the charts, AGN has had a standout year, tacking on almost 66% to trade at $184.21. In the options pits, meanwhile, short-term speculators have shown a distinct preference for puts over calls, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.93, which ranks just 2 percentage points from a 52-week peak.

  • SRPT is bracing for a 37% plunge right out of the gate, after saying it will delay the filing for approval of its muscular dystrophy drug Eteplirsen until mid-2015 after the Food and Drug Administration (FDA) requested more information. It's been a roller-coaster ride for SRPT in 2014, with the shares closing Friday at $23.56 -- 15.7% above their year-to-date breakeven line. Today's projected price move could please one group of traders, though -- short sellers. At present, nearly 36% of the stock's float is sold short, and would take almost 14 sessions to cover, at Sarepta Therapeutics Inc's average daily pace of trading. Based on the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 36.54 -- which ranks in the highest percentile of its annual range -- a few of these shorts may be hedging their bearish bets with long calls.

  • A labor union is encouraging workers at five AMZN locations in Germany to strike, due to labor conditions and pay disputes. It's been a rough go both on and off the charts for the Amazon.com, Inc., and today, the stock is positioned to extend Friday's earnings-induced drop. In spite of AMZN's recent fundamental and technical struggles, most analysts remain optimistic. In fact, 19 out of 28 covering the security maintain a "buy" or better rating, with not a single "sell" to be found. Plus, the consensus 12-month price target of $356.94 stands at a 24.3% premium to the equity's current perch at $287.06.

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