Analyst: This Pharmaceutical Stock Could Rally 40%

Square stock has nearly doubled in size this year

Managing Editor
Jul 21, 2017 at 3:08 PM
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U.S. stocks are lower this afternoon, brought down by a round of rough earnings reports. Pharmaceutical stock Neuroderm Ltd (NASDAQ:NDRM), automaker Ford Motor Company (NYSE:F), and payments processor Square Inc (NYSE:SQ) are in all in the news today. Here's a quick look at what's moving shares of NDRM, F, and SQ.

Deutsche Bank Rating, Price Target Boost Neuroderm Stock

Neuroderm stock, one of the top performers on Nasdaq today, is up 8% to trade at $33.45, a record high, after Deutsche Bank initiated coverage of healthcare stock with a "buy" rating and a $47 price target -- deep into uncharted territory, and a premium of 40% to NDRM's current price. This adds to what has already been a stellar year for NDRM stock, which has tacked on 50% year-to-date. The shares have been knocking on the door of the $31 level since mid-June, after M&A rumors created a bull gap, and Neuroderm stock finally toppled that level this week.

Short sellers are still sniffing around, however. NDRM's short interest grew by 30% during the last two reporting periods, and now accounts for 1.5 million shares, or 14% of the stock's total available float. At NDRM's average daily trading volume, it would take more than six sessions to repurchase all of those pessimistic positions. A short squeeze could propel Neuroderm shares even higher.

Ford Files Petition to Avoid Recall, Stock Swings Lower

Ford stock is 1.5% lower to trade at $11.52, after the auto giant filed a petition to avoid recall of 2.2 million vehicles that had reported airbag defects. A spokesperson said the Detroit company wishes to "continue testing and analyzing our inflators." Since hitting a four-year low of $10.67 on May 17, F shares have made notable progress. However, the stock is now staring up at its 200-day moving average, as well as the $11.80 region -- where Ford stock fell during a massive March slump.

In the options pits, traders have grown increasingly pessimistic. F stock has an International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) 50-day put/call volume ratio of 1.02, which ranks in the 96th percentile of its annual range. 

Square Stock Hits Record High

Square stock is up 1.8% to trade at $26.87, and earlier touched a record high of $27.11, after it added Shake Shack CEO Randy Garutti to its board of directors. It's been an outstanding year for SQ stock, which has added 98% year-to-date, thanks to support from its 40-day moving average.

Analysts remain skeptical, however. Of the 22 brokerages covering SQ stock, nine rate it a "hold." This leaves room for more upgrades, which could send the stock even higher down the road.

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