United Technologies CEO Mulls Breakup; Stock Eyes Best Day Since 2016

A short squeeze could be boosting Sangamo Therapeutics stock

by Patrick Martin

Published on Feb 22, 2018 at 12:59 PM

U.S. stocks have steadily climbed today, as interest-rate hike concerns begin to die down. Dow component United Technologies Corporation (NYSE:UTX) and biotech stock Sangamo Therapeutics Inc (NASDAQ:SGMO) are higher, while healthcare stock Brookdale Senior Living, Inc (NYSE:BKD) is sinking. Here's a closer look at what shares of UTX, SGMO, and BKD are reacting to today.

UTX Stock Lifted By CEO's Breakup Comments

United Technologies stock is up 4.1% to trade at $134.57 -- leading the 30 Dow stocks this afternoon -- after CEO Greg Hayes disclosed at a conference that he was looking into breaking up the company's business portfolio. Hayes questioned whether United Technologies would be better off split into three separate businesses, but said it's a "question for the board." The news has United Technologies stock pacing for its best day since February 2016.

UTX stock has gained roughly 19% in the last 52 weeks, and netted a record high of $139.24 on Jan. 29. Shortly after, the shares pulled back with the broader equities market, but quickly bounced from their 100-day moving average.

Options traders have ramped up their bearish exposure at an unusual pace of late. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), UTX's 10-day put/call volume ratio of 2.24 ranks in the 94th annual percentile. Continued technical outperformance could lead to an unwinding of these bearish bets.

Sangamo Therapeutics Soaring On Gilead Partnership

Shares of Sangamo Therapeutics are up 20% to trade at $26.55, and just notched a 17-year high of $27.30. SGMO stock is near the top of the Nasdaq, after the company secured a $3 billion gene-editing deal with Gilead Sciences (GILD) to develop cancer treatments. Sangamo stock has added a whopping 622% year-over-year, and 62% in 2018 alone.

A short squeeze could provide more fuel for SGMO's run, and may be responsible for some of today's upside. Short interest increased by 4.6% during the last two reporting periods, and represents a whopping 9.8% of the stock's total available float. This accounts for nearly six days' of pent-up buying demand, at the equity's average pace of trading.

Brookdale Stock Plummets After Rejecting Buyout Offer

Brookdale Senior Living stock is down 20% to trade at $7.15 -- on track for its worst one-day loss since November 2008. BKD is one of the worst stocks on the New York Stock Exchange (NYSE) today, after the company rejected a $9-per-share buyout offer from an unknown suitor. BKD stock fell to a nine-year low of $7.00 out of the gate, and is currently short-sale restricted. The equity has shed 51% year-over-year.

Analysts remain in the stock's corner, for now. Exactly 80% of brokerages covering BKD stock rate it a "buy" or "strong buy." Furthermore, BKD's average 12-month price target of $13.67 sits 91% higher than the stock's current perch. This indicates there is ample room for downgrades and/or price-target cuts on the struggling healthcare name.


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