Buzz Stocks: Alibaba Group Holding Ltd, ZS Pharma Inc, and Lexicon Pharmaceuticals, Inc.

Today's stocks to watch include Alibaba Group Holding Ltd (BABA), ZS Pharma Inc (ZSPH), and Lexicon Pharmaceuticals, Inc. (LXRX)

by Andrea Kramer

Published on Nov 6, 2015 at 9:30 AM
Updated on Nov 6, 2015 at 9:32 AM

U.S. stocks are pointed lower, as solid payrolls are fueling rate-hike expectations. Among the equities in focus are Chinese e-tailer Alibaba Group Holding Ltd (NYSE:BABA), as well as drugmakers ZS Pharma Inc (NASDAQ:ZSPH) and Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX).

  • BABA is trading around breakeven at $85.38 ahead of the bell, as traders weigh the company's purchase of Youku Tudou Inc (ADR) (NYSE:YOKU). Alibaba Group Holding Ltd agreed to buy "China's YouTube" for $3.67 billion -- slightly higher than its mid-October offer of $3.6 billion -- which amounts to $27.60 per ADS, a 35.1% premium to YOKU's pre-bid closing price on Oct. 15. The shares of BABA are just coming off a stellar October, in which the stock rallied more than 42%, with help from the company's stellar earnings showing late in the month. However, short interest still represents more than a week's worth of pent-up buying demand, at BABA's average pace of trading. A continued uptrend -- or perhaps a strong Singles Day next week -- could propel the equity even higher.
  • ZSPH is also in the M&A spotlight, after AstraZeneca plc (ADR) (NYSE:AZN) agreed to buy the firm for $2.7 billion, or $90 per share. That represents a hefty premium of 42% to ZSPH's closing price of $63.31 yesterday. Accordingly, ZSPH shares are pointed nearly 41% higher in pre-market trading. What's more, a slew of recent option buyers could make a hefty profit today. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than 16.5 ZS Pharma Inc calls have been purchased for every put during the past two weeks.
  • LXRX is poised to pop more than 30%, thanks to a collaboration agreement with Sanofi SA (ADR) (NYSE:SNY). Specifically, Lexicon Pharmaceuticals, Inc. and the French drugmaker will develop and commercialize Sotagliflozin, an oral diabetes treatment. LXRX shares have already advanced more than 10% in November, and today's surge should put them well north of their recently contentious 10-week and 20-week moving averages. Furthermore, a short squeeze could add fuel to the fire. Short interest represents a healthy 25.8% of LXRX's total available float, and would take more than 13 sessions to buy back, at the stock's average daily trading volume.

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