2 Upgraded Drug Stocks Squeezing Shorts

Janney said to buy TTOO stock after earnings

by Karee Venema

Published on May 9, 2018 at 10:21 AM

T2 Biosystems Inc (NASDAQ:TTOO) was upgraded to "buy" from "neutral" at Janney, after the sepsis specialist reported first-quarter revenue of $2.3 million -- well above the consensus estimate of $1.4 million. Leerink also chimed in, boosting its price target to $5 from $4 -- though this is still a discount to last night's close at $6.10. Nevertheless, TTOO stock is up 7.5% today to trade at $6.56.

Longer term, the shares are up nearly 63% year-to-date, with pullbacks contained by double-barreled support from TTOO's 80-day and 200-day moving averages. The surging stock seems ripe for a short squeeze, too. Short interest on T2 Biosystems is up 76% from the Feb. 15 reporting period to 1.62 million shares. This represents 8.1% of the security's available float, and would take nearly eight days to cover, at the average pace of trading.

Arrowhead Pharmaceuticals Inc (NASDAQ:ARWR) also received bullish brokerage attention after the biopharmaceutical firm reported a slimmer-than-expected fiscal second-quarter loss. Specifically, Cantor Fitzgerald upgraded ARWR stock to "overweight" from "neutral," and raised its price target to $13 from $5 -- territory not charted since October 2014.

The brokerage firm waxed optimistic on the company's transition back into the clinical business. Cantor Fitzgerald also said it is upbeat about ARWR's growing pipeline, which includes upcoming clinical trial applications for its cystic fibrosis and renal cell carcinoma treatments.

At last check, ARWR stock is up 19.5% to trade at $9.26 -- breaking through previous congestion in the $8 region to hit a three-year high of $9.60. The shares are now up more than 147% in 2018 on support from their 50-day and 80-day moving averages, and short sellers are likely spooked. The 6.60 million ARWR shares sold short represent 10% of the stock's float, or 5.2 days' worth of pent-up buying demand, at the average pace of trading.

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