Dog Drug Approval Drives Aratana Therapeutics Inc (PETX) Higher

Aratana Therapeutics Inc (NASDAQ:PETX) is enjoying a rare day in the sun, after the FDA approved its dog appetite drug

May 18, 2016 at 11:10 AM
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Aratana Therapeutics Inc (NASDAQ:PETX) has jumped 5% at $6.35, after the veterinary drugmaker's appetite stimulant for dogs received Food and Drug Administration (FDA) approval. The move higher should come as a welcome development in the options pits, where short-term traders have been more call-skewed than usual.

Diving right in, PETX sports a Schaeffer's put/call open interest ratio (SOIR) of 0.15, with short-term call open interest outstripping put open interest by a more than 6-to-1 margin. What's more, this ratio ranks in the low 15th percentile of its annual range, confirming a heightened preference for calls over puts among traders targeting options expiring in the next three months.

Analysts have been quite bullish
 toward the stock, too. In fact, five of six brokerage firms rate PETX a "strong buy," with not a single "sell" rating on the books. If that's not enough, the stock's average 12-month price target of $12.33 stands at nearly twice the shares' current perch, and in territory not charted since September.

On the other hand, short sellers haven't been shy about targeting PETX. Currently, 15.2% of the stock's float is sold short, which would take nearly a week to cover, at its average trading rate.

Today's gains aside, the short sellers have a strong case for betting against Aratana Therapeutics Inc (NASDAQ:PETX). The stock has been dismal long term, dropping 53% year-over-year. And while today's breakout is a welcome sight for shareholders, PETX isn't out of the woods. Currently, the drug stock is struggling to topple its 30-day moving average, which has served as resistance in the past.

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