Sarepta Stock Expected to Rally Another 30%

Guggenheim named Mylan its top pick among generic drug makers

Managing Editor
Dec 12, 2017 at 10:08 AM
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Drug stocks have put in a strong performance in 2017, and analysts are taking note. This morning, the shares of biotechs Mylan N.V. (NASDAQ:MYL) and Sarepta Therapeutics Inc (NASDAQ:SRPT) are enjoying some bullish analyst attention. Below, we will take a closer look at these bullish brokerage notes, and see how the stocks are reacting. 

Mylan Stock is Guggenheim's 'Top Pick'

Guggenheim initiated coverage on Mylan with a "buy" rating this morning, saying the company is better positioned against its peers following unexpected Food and Drug Administration (FDA) approval of its generic multiple sclerosis therapy drug in October. MYL stock is up 1.6% to trade at $40.14 -- blowing past familiar resistance at $39.80, after closing near here yesterday. This region has kept a tight lid on MYL since April, and represents a 61.8% Fibonacci retracement of the stock's 2017 decline.

Options traders have been betting on resistance to hold, too. The stock's January 2018 40-strike put has seen the biggest rise in open interest over the last two weeks, with more than 18,000 contracts added, and data from the major options exchanges confirms significant sell-to-open activity here. The last time MYL closed a week above $40 was in early June.

Cowen Sees Multi-Year Highs for Sarepta Stock

Sarepta received a price-target hike to $71 from $69 at Cowen and Company -- territory not charted since February 2002 -- waxing optimistic over the launch of the drugmaker's muscle wasting disorder drug Exondys 51, as well as the pipeline for its Duchenne muscular dystrophy treatments. Nevertheless, SRPT stock down 0.2% to trade at $54.28 this morning. The stock has still tacked on 98% year-to-date, and touched an annual high of $57.57 on Nov. 7. Plus, the shares' rising 50-day moving average has contained almost all pullbacks since June.

A short squeeze could provide more fuel for SRPT's fire. Short interest increased by 20.6% during the last reporting period to 10.60 million shares, or roughly 22% of the stock's total available float. It would take nearly five days for shorts to fully cover their positions, at SRPT's average pace of trading.

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