2 Biotech Stocks Climbing After Earnings

A short squeeze could add fuel to the fire for ACHN and ACAD stocks

Managing Editor
Aug 9, 2017 at 9:59 AM
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Analysts are weighing in on biotech stocks Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) and ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), as well as drink maker Monster Beverage Corporation (NASDAQ:MNST), all of which just reported earnings. Here's a quick roundup of today's bullish brokerage notes on shares of ACHN, ACAD, and MNST.

Achillion Stock Soaring After Promising Drug Data

Achillion Pharmaceuticals stock is up 22% to trade at $4.91, after the biotech reported patients in a mid-stage clinical study of ACH-4471 for a blood disorder treatment responded very well to the drug. In addition, ACHN reported a second-quarter per-share loss that matched analysts' expectations. As a result, William Blair raised its fair value of Achillion stock to $10 from $6 -- more than double ACHN's current price -- while Leerink raised its price target to $8 from $6. The rise today has ACHN shares testing the $5 level, which has stifled previous rallies this year.

A short squeeze could add fuel to the stock's fire, though. Short interest represents more than 11% of ACHN's total available float, and would take nearly eight sessions to buy back, at Achillion stock's average daily trading volume.

Earnings Results Have Acadia Stock Red-Hot

ACADIA Pharmaceuticals stock is up 11% to trade at $32.75, after the company reported a narrower-than-expected per-share loss and stronger-than-expected sales for the second quarter. As a result, three brokerages raised their price targets on ACAD stock, including to $54 from $50 at Piper Jaffray -- expected upside of 65% to the shares' current price. The boost sends ACAD shares past their 50-week moving average for the first time since early May.

While short sellers have been abandoning ship recently, short interest for ACAD shares still accounts for 18% of the stock's total available float. It would take more than two weeks to repurchase all of those pessimistic positions. Should short sellers continue to bail, it could create tailwinds pushing ACAD stock higher.

Monster Beverage Stock Dips Amid Shortage Concerns

Monster Beverage stock is down 2% to trade at $51.61, as a warning of supply shortages overshadows an earnings beat. Nevertheless, the upbeat report prompted four brokerages to raise their price targets on MNST stock, including to $65 from $63 at Jefferies. Monster stock has tacked on 15% year-to-date, and shot to an annual high of $54.24 on July 28. However, today's pullback puts the shares in danger of closing beneath their 50-day moving average for the first time in three months.

In the options pits, traders were flocking to MNST puts over calls at an accelerated clip ahead of earnings. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows MNST with a 10-day put/call volume ratio of 0.99, which ranks in the 71st percentile of its annual range. 

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