3 Biotechs Getting Blasted

The post-earnings price action on bluebird bio Inc (BLUE), Celgene Corporation (CELG), and Lannett Company, Inc. (LCI) has been positively brutal

Alex Eppstein
Nov 5, 2015 at 11:26 AM
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While much of Wall Street is drooling over Facebook Inc's (NASDAQ:FB) latest earnings report, the opposite is true regarding a trio of drugmakers that just exited the confessional. Specifically, traders are panning quarterly results from bluebird bio Inc (NASDAQ:BLUE), Celgene Corporation (NASDAQ:CELG), and Lannett Company, Inc. (NYSE:LCI), which are all sharply lower at midday. Here's a closer look at what's happening on the charts and beyond.

BLUE has surrendered 19.6% of its value today to trade at $72.48, and has now lost almost one-fifth of its value on a year-to-date basis. The technical beat-down comes on the heels of a wider-than-forecast third-quarter loss and huge revenue miss, hurt by an amendment to a collaboration with CELG -- under which bluebird bio Inc re-acquired rights to its CAR T-cell therapy. Today's bearish gap should cheer the spirits of option bears. BLUE's Schaeffer's put/call open interest ratio (SOIR) of 0.85 ranks in the high 88th percentile of its annual range, indicating short-term speculators are more put-heavy than usual. On the other hand, analysts may want to reconsider their upbeat take on the equity, as every single covering firm has doled out a "buy" or better assessment.

CELG has plunged 5.5% to trade at $120.17, after the gene therapy developer's quarterly profit beat the consensus estimate by its smallest margin in nearly two years, and revenue grew at the slowest rate in five quarters due to cooling demand for its cancer treatment Revlimid. As such, the stock is on track to close below its 20-day moving average for the first time since mid-October. If Celgene Corporation extends today's losses, things could get ugly. In particular, the shares are vulnerable to downgrades, considering 12 of 14 analysts rate them a "buy" or better, with not a single "sell" opinion in sight. Plus, CELG's consensus 12-month price target of $147.47 stands in never-before-seen territory, suggesting price-target reductions are a possibility.

LCI has surrendered one-fifth of its value, last seen at $36.75 -- and fresh off an annual low of $36.40. Sparking the sell-off is a 5% drop in fiscal first-quarter profit, which prompted Craig-Hallum to cut its rating to "hold" from "buy," and Roth Capital to trim its price target to $47. Short sellers have been banking on Lannett Company, Inc. to tumble. A mind-bending 42% of the stock's float is sold short, representing roughly nine days of trading activity, at typical volumes.

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