Buzz Stocks: Cempra, Conatus Pharma, NVIDIA

Today's stocks to watch in the news include Cempra Inc (CEMP), Conatus Pharmaceuticals Inc (CNAT), and NVIDIA Corporation (NVDA)

Jan 5, 2015 at 9:09 AM
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U.S. equities are pointed lower in pre-market trading, as energy continues to weigh on investor sentiment. In company news, today's stocks to watch include drugmakers Cempra Inc (NASDAQ:CEMP) and Conatus Pharmaceuticals Inc (NASDAQ:CNAT), as well as microchip designer NVIDIA Corporation (NASDAQ:NVDA).

  • CEMP is pointed 16% higher ahead of the bell, following promising drug-trial results. Specifically, the firm's antibiotic, solithromycin -- designed to fight pathogens that contribute to community-acquired bacterial pneumonia (CAPB) -- met the main goal of a late-stage trial. On the charts, Cempra Inc has been a long-term outperformer, rallying 74.5% year-over-year, and hitting a record high of $24.71 last week before settling at $22.89. Not surprisingly, the brokerage bunch is solidly behind the shares, with 100% of covering analysts handing out "strong buy" recommendations. In fact, both Baird and Cowen and Company lifted their price targets this morning -- to $32 and $35, respectively -- while underscoring "outperform" ratings.

  • Sector peer CNAT announced it will release top-line results from three clinical trials on Thursday evening. A conference call will be held after the market closes, with company officials planning to touch on the development and commercialization of three liver disease treatments. As a result of this news, Conatus Pharmaceuticals Inc is up 34% in electronic trading. This strong price action is more of the same for a stock that has rallied nearly 31% year-over-year, and has outperformed the broader S&P 500 Index (SPX) by close to 21 percentage points during the last two months. As such, option traders have been upping the bullish ante on CNAT. The equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio checks in at 15.77 -- meaning speculators have bought to open nearly 16 calls for every put over the last two weeks. What's more, from a historical standpoint, buyers are paying a pretty penny to bet on CNAT's short-term trajectory, as the equity's Schaeffer's Volatility Index (SVI) of 157% registers in the 86th percentile of its annual range.

  • Finally, NVDA unveiled its Tegra X1 microprocessor at the Consumer Electronics Show (CES) over the weekend. The chip boasts a 256-core graphics processing unit (GPU) on top of an 8-core central processing unit (CPU), resulting in a teraflop of computing power and the potential to bring desktop-based games to mobile handhelds. Technically speaking, NVIDIA Corporation has surged 28.5% over the last 12 months, and -- at $20.13 -- is not far from its multi-year high of $21.25, touched last month. On the Street, however, there's plenty of pessimism being lobbed toward the shares. NVDA's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.92 ranks in the 100th annual percentile (though some of this may be hedging activity), and 7.3% of the equity's float is sold short -- representing almost seven days' worth of pent-up buying power, at typical daily trading volumes. Should these skeptics capitulate in the face of NVDA's technical tenacity, it could result in tailwinds.


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