2 Pharma Stocks Soaring on Upbeat Drug Data

Options traders have been put-heavy toward CELG stock during the past two weeks

Emma Duncan
Dec 11, 2017 at 10:12 AM
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Drug stocks are in focus this morning, including sector partners Celgene Corporation (NASDAQ:CELG) and bluebird bio Inc (NASDAQ:BLUE). The pair reported positive data on their co-developed CAR-T drug -- designed to treat patients with advanced multiple myeloma -- with 94% of patients responding to the treatment, and over half remaining in complete remission. "This is unheard of, something that we haven’t seen with any drugs approved for myeloma in this type of population," said the study's lead investigator, Dr. Jesus Berdeja. Below, we'll take a look at how CELG and BLUE stocks are reacting today.

CELG Option Buyers May Be Getting Nervous

The shares of CELG were last seen up 2.5% at $108.77. The pharma stock has had a rough year, suffering two big bear gaps in October, though the shares are up 15% from their their October lows. Still, in the fourth quarter, Celgene stock has surrendered more than 25%.

Ahead of the positive drug data announcement, options traders were leaning toward the bears' camp on Celgene stock. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows CELG with a 10-day put/call volume ratio of 0.90, ranking in the 90th percentile of its annual range. This suggests puts have been bought over calls at a faster-than-usual clip during the past two weeks.

What's more, CELG sports a Schaeffer's put/call open interest ratio (SOIR) of 0.77, which is higher than 75% of all other readings from the past year. This indicates that short-term options traders have rarely been more put-heavy on Celgene stock in the last 52 weeks.

bluebird bio Stock Soars to Record High

Bluebird bio stock is rallying, up an impressive 19.5% to trade at $204.55, at last check. Earlier, the shares touched a record high of $222.03. BLUE has now more than tripled in 2017, riding the support of its 30-day and 160-day moving averages.

Short interest on BLUE fell 17.2% in the past two reporting periods, and now represents more than 9% of the stock's total available float. At bluebird stock's average daily trading volume, it would take less than four days for the shorts to cover their bearish bets.

Analysts have been optimistic towards the pharmaceutical stock in recent weeks, with 16 out of the 17 following the stock sporting "hold" or "strong buy" recommendations. Brokerage firms today are weighing in on BLUE stock, too. Jefferies upgraded the equity to "buy" from "hold," and hiked its price target by 62% -- to $211 from $130. Likewise, Cantor Fitzgerald, BMO, and SunTrust Robinson lifted their respective price targets to $113, $215, and $223.


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