The $6B Chip Sector Deal and 2 Drug Stocks Breaking Out

The confirmation of the Marvell-Cavium deal has semiconductor stocks on the rise

Managing Editor
Nov 20, 2017 at 2:21 PM
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U.S. stocks are trading cautiously higher this afternoon, with volume quiet ahead of the Thanksgiving holiday. Among the names making big moves are tech stock Marvell Technology Group Ltd. (NASDAQ:MRVL), plus biopharmaceutical companies DBV Technologies SA (NASDAQ:DBVT) and Intra-Cellular Therapies Inc (NASDAQ:ITCI). Here's a quick look at what's moving shares of MRVL, DBVT, and ITCI.

Marvell Jumps on Cavium Buyout

Marvell Technology is pulling the chip sector higher after announcing a $6 billion deal to buy Cavium (CAVM). MRVL is up 5% at $21.31, and earlier set a new six-year high of $21.58. Marvell shares have now gained more than 53% on the year, and they've taken out their prior 2017 peak of $21.08 -- a high set as recently as Nov. 6, right after The Wall Street Journal initially reported the potential CAVM tie-up.

Meanwhile, with MRVL earnings due out on Tuesday, Nov. 28, short-term options on the chip stock are relatively expensive. According to Trade-Alert, 30-day at-the-money implied volatility on MRVL stands at 33.3%, in the 70th percentile of its annual range.

DBVT Soars on Upbeat Drug Data

The U.S.-traded shares of DBVT are on the rise after the company reported that its peanut allergy drug, Viaskin Peanut, met the primary safety goal of a late-stage study. The stock is trading up 8.4% at $25.39, and is on pace to close above its 20-day moving average for the first time since its Oct. 23 bear gap -- prompted by poorly received efficacy data on Viaskin Peanut -- which carried the stock to a new two-year low of $21.51 less than a week ago, on Nov. 14.

Since that late-October sell-off, most analysts have remained bullish on DBVT, with seven brokerage firms out of nine still calling the stock a "buy" or better. However, since Oct. 20, the average 12-month price target on the stock has been slashed to $37.89 from $57.75.

ITCI Gets FDA Fast-Track Boost

Intra-Cellular Therapies stock is higher after its schizophrenia drug, lumateperone, received fast-track status from the Food & Drug Administration (FDA). ITCI was up 6.1% at $16.25 at last check, but upside today has been capped by the stock's formerly supportive 50-day moving average.

We're likely seeing a bit of a short-squeeze rally playing out for ITCI today. Short interest currently represents 14.3% of the stock's total available float, and at ITCI's average daily trading volume, it would take exactly 10 days for the shorts to cover all of their bearish bets.

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