Kite Pharma Inc (KITE) Leaves Bears (and Bulls) Reeling After Earnings

Analysts and short sellers are reconsidering their extreme positions on Kite Pharma Inc (KITE) after earnings

Mar 1, 2016 at 3:02 PM
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Biopharmaceutical firm Kite Pharma Inc (NASDAQ:KITE) reported a slimmer-than-predicted fourth-quarter loss after Monday's close, sending the shares soaring higher -- up 14.5% at $51.20 this afternoon. In the wake of last night's earnings report, both traders and analysts have scrambled to adjust their expectations on KITE stock.

On the charts, KITE touched an all-time high of $89.84 last November -- but the stock then quickly plummeted to an annual low of $38.41 last month, shedding more than 57% of its value from peak to trough. And since early February, KITE shares have repeatedly been rejected by resistance in the $51 area.

In light of the stock's rapid plunge, short sellers have heavily targeted KITE. Short interest rose more than 9% in the last two-week reporting period -- and now accounts for nearly 15% of the stock's total available float. At KITE's average daily volume, it would take about a week for short sellers to buy back all of these shorted shares.

While today's post-earnings pop suggests that some of the shorts may already be stampeding for the exits, it's worth noting that KITE is now staring down its 50-day moving average. Currently located at $51.75, this trendline lies just north of existing resistance near $51, as well as KITE's intraday peak today of $51.60. If the shares back down from this tough technical test, it could embolden more shorts to keep piling on.

On the other end of the sentiment spectrum, analysts were unanimously bullish on KITE ahead of last night's earnings report. Every analyst covering the stock currently gives KITE the equivalent of a "strong buy" rating. However, this morning, analysts at Jefferies, Goldman Sachs, Canaccord Genuity, and Stifel all cut their price targets on the security -- suggesting KITE's quarterly performance didn't quite live up to this group's high hopes. Any downgrades or additional bearish notes could apply fresh pressure to Kite Pharma Inc (NASDAQ:KITE) in the days and weeks ahead.

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