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)

by Andrea Kramer

Published on Nov 11, 2015 at 9:27 AM
Updated on Nov 11, 2015 at 9:31 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. 

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