Buzz Stocks: Salix Pharma, ARIAD Pharma, Micron Tech

Today's stocks to watch include Salix Pharmaceuticals, Ltd. (SLXP), Ariad Pharmaceuticals, Inc. (ARIA), and Micron Technology, Inc. (MU)

Feb 13, 2015 at 9:25 AM
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U.S. benchmarks are set to extend yesterday's run higher, with all eyes on oil and Greece. Among the equities in focus are drugmakers Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), as well as semiconductor issue Micron Technology, Inc. (NASDAQ:MU).

  • After jumping 4.1% yesterday, SLXP is pointed nearly 2% higher ahead of the bell, on reports that Shire PLC (ADR) (NASDAQ:SHPG) and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) may be drumming up bids for the firm. Since an early November bear gap to $86, SLXP has made serious progress, soaring 73.5% to land at $149.18. Still, skepticism runs rampant toward Salix Pharmaceuticals, Ltd., as short interest accounts for more than 20% of the stock's total available float. In addition, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.97 stands just 10 percentage points from an annual peak, suggesting near-term traders are more put-biased than usual, and the consensus 12-month price target of $137.63 represents a discount to SLXP's current perch.

  • ARIA is set to rally 4.8% out of the gate, as traders weigh buzz of a possible proxy fight on the horizon. Specifically, activist hedge fund and ARIA majority shareholder Sarissa Capital is allegedly looking to oust Ariad Pharmaceuticals, Inc. founder and CEO Harvey Berger. The anticipated jump should take ARIA -- which settled at $6.90 yesterday -- north of $7.20 for the first time in 2015, and an extended rally could spook the shorts. Short interest represents more than one-quarter of the equity's float, and would take about two weeks to repurchase, at ARIA's average pace of trading.

  • Finally, MU is flirting with a 1% lead in electronic trading, after the firm announced a strategic partnership with Seagate Technology PLC (NASDAQ:STX). Thanks to a supply-agreement-related boost on Tuesday, MU has already added 10.5% this week to settle yesterday at $31.94 -- above its 200-day moving average for the first time in a month. From a longer-term perspective, Micron Technology, Inc. has advanced 28.2% during the past year, yet option players have been picking up puts over calls at a rapid-fire rate. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.72 stands higher than 98% of all other readings from the past year. A mass exodus of option bears could translate into a tailwind for MU.
 

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