Beaten-Down Sientra Inc, XBiotech Inc Explode Higher on Headlines

Sientra Inc (SIEN) and XBiotech Inc (XBIT) are seeing huge gains, but remain long-term laggards

Jan 8, 2016 at 10:38 AM
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The stock market is off to a fast start, attempting to fight back from steep week-to-date losses. Healthcare is among the outperforming sectors this morning, with names such as Sientra Inc (NASDAQ:SIEN) and XBiotech Inc (NASDAQ:XBIT) flying up the charts. Below, we'll take a closer look at those two stocks, as well as the sentiment surrounding them.

SIEN, known primarily for manufacturing silicone gel breast implants, is up 19.8% at $7.06 after independent, third-party testing of its products indicates they are safe for patients. The gains are much needed, considering the stock has fallen off a cliff since mid-September -- after regulators in the U.K. called the company's implants into question and suspended the CE certificate for all medical devices made by its contract manufacturer, Silimed. Specifically, since its September peak of $24.46, SIEN has lost over 70% of its value.

While shareholders may be cheering today's bounce, short sellers are getting burned. During the last two reporting periods, short interest on Sientra Inc more than doubled, and now represents 16% of the stock's total float.

Meanwhile, biotech XBIT has soared 9.6% to trade at $9.56, following additional positive data from a Phase III European trial of its cancer treatment, Xilonix. Still, the shares remain off over 12% on the week, and have lost over two-thirds of their value since topping out in April at $32.50 -- just days after going public.

Unlike SIEN, short interest on XBiotech Inc has been declining rapidly. Over the past two reporting periods, short interest fell over 39%. And while almost 5% of the stock's float is still dedicated to short interest, it would take just over one session to cover these bets, at XBIT's average volumes.

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