Buzz Stocks: Horizon Pharma PLC, J C Penney Company Inc, and Alibaba Group Holding Ltd

Today's stocks to watch include Horizon Pharma PLC (HZNP), J C Penney Company Inc (JCP), and Alibaba Group Holding Ltd (BABA)

Nov 11, 2015 at 9:27 AM

U.S. stocks are headed higher this morning, extending yesterday's positive momentum. Among the equities in focus are drugmaker Horizon Pharma PLC (NASDAQ:HZNP), retailer J C Penney Company Inc (NYSE:JCP), and Chinese Internet issue Alibaba Group Holding Ltd (NYSE:BABA).

HZNP is pointed 15% lower ahead of the bell, after settling Tuesday at $22.38. Pressuring the shares was news that Express Scripts Holding Company (NASDAQ:ESRX) is cutting ties to Linden Care, after it "found that it predominantly dispensed Horizon prescription drugs" (subscription required). ESRX is also suing Horizon Pharma PLC for about $140 million, claiming the company failed to honor contractual rebate obligations. HZNP fired back: "Our philosophy of ensuring that patients get the medicine their doctors prescribe is threatening Express Scripts' profiteering and exposing what we believe is a lack of care for patients and respect for physicians." One group likely cheering the drama: recent short sellers. Short interest on HZNP skyrocketed 45% during the past two reporting periods, and now accounts for more than 10% of the stock's float. Meanwhile, HZNP could be ripe for some downgrades, with six of seven analysts doling out "buy" or better ratings.

JCP is poised to pop 2.4%, after the firm unveiled solid third-quarter sales and settled a class-action lawsuit. A short squeeze could add fuel to the equity's fire, as short interest accounts for 31.2% of JCP's total available float. In fact, at the security's average pace of trading, it would take about eight sessions to buy back all these bearish bets. Likewise, the stock's Schaeffer's put/call open interest ratio (SOIR) of 2.01 stands higher than 98% of all other readings from the past year, implying that near-term options traders have rarely been more put-heavy. However, J C Penney Company Inc isn't out of the woods just yet; the firm still has to report earnings Friday morning. On the charts, JCP has added almost 34% in 2015, docking at $8.68 on Tuesday.

BABA is headed for a 1.1% jump out of the gate, as traders cheer a record-breaking Singles' Day (held every Nov. 11). The shares of BABA finished at $81.43 on Tuesday, and despite a stellar run over the past couple of months, remain more than 21% lower year-to-date. While Jim Chanos called Alibaba Group Holding Ltd an intriguing bearish target, analysts and near-term options traders remain optimistic. Sixteen of 19 brokerage firms consider BABA a "buy" or better, and the equity's SOIR of 0.65 registers in the 22nd percentile of its annual range.

Get the skinny on all the biggest stories of the morning… Sign up now to get Schaeffer's Midday Market Check delivered straight to your inbox!

Follow @Schaeffers

The $25K Day Trading Barrier is Gone

The long-standing Pattern Day Trader (PDT) rule that required many traders to maintain a $25,000 account balance is no longer standing in the way.

That means more traders can actively pursue short-term opportunities without the barrier that kept so many on the sidelines.

Now it's all about having the right strategy.

Dynamite Day Trading Signals helps you hit the ground running with up 2 options trade alerts per week, built to capture fast-moving opportunities.

👉 Sign up now to receive the next trade