Morgan Stanley Hikes Price Targets on 2 Hot Drug Stocks

Options traders are favoring puts on both CELG and VRTX

Managing Editor
Dec 18, 2017 at 9:46 AM
facebook X logo linkedin

Drug stocks are in focus this morning, including Celgene Corporation (NASDAQ:CELG) and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Both CELG and VRTX received price-target boosts from Morgan Stanley this morning, but one outlook was decidedly more bullish than the other. Here's a look at how CELG and VRTX are reacting today.

CELG Stock Extends Recovery from Post-Earnings Lows

While Morgan Stanley hiked its price target on CELG stock to $103 from $97, the new target still represents a discount to the equity's current price. Specifically, the shares of CELG are up 0.2% at $109.62 at last check. The pharma stock has had a rough year, suffering two big bear gaps in October -- but CELG is up 16% from its Oct. 26 intraday low, and its 20-day moving average is now on the verge of a bullish cross with its 40-day counterpart.

Ahead of today's price-target raise, 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 50-day put/call volume ratio in the 73rd percentile of its annual range. This suggests puts have been bought at a faster-than-usual clip relative to calls during the past 10 weeks.

Options Traders Are Put-Heavy on VRTX

Morgan Stanley hiked its price target on VRTX stock to $193 from $190 -- this time, a significant increase to the stock's most recent trading price. At last check, Vertex Pharma stock was up 0.2% at $146.15, and 98% higher year-to-date. VRTX is attempting to close the day above resistance at its 40-day moving average, located at $145.90, which has kept a tight lid on the shares for nearly two months.

Options traders have been favoring puts on Vertex stock. The drug concern sports a Schaeffer's put/call open interest ratio (SOIR) of 1.21, which ranks higher than 93% of all other readings from the past year. This indicates that short-term options traders have rarely been more put-heavy on Vertex Pharma stock in the last 52 weeks. However, given that the stock has roughly doubled in value since the end of 2016, it's possible that some shareholders have purchased VRTX put options simply to lock in paper profits or hedge against a short-term downturn.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI