Drug Stock Headed for Record Lows After Discounted Share Offering

Short sellers will likely be sidelined in today's trading

Patrick Martin
Jul 27, 2018 at 9:13 AM
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Nabriva Therapeutics (NASDAQ:NBRV) stock is trading down 15.6% ahead of the open, after the Ireland-based biopharmaceutical firm priced its stock offering at roughly $50 million, or $2.75 per share. The is a discount to Thursday's close of $3.08, which was a record low at that time.

Should today's expected price action play out, it would have NBRV logging its worst day since May 21, when the stock tumbled over safety worries pertaining to Lefamulin, the company's pneumonia drug. Prior to today, the shares have given back more than 70% over the last 12 months, guided lower by their descending 20-week moving average.

Analysts have remained committed to the biopharma, though. All seven of the brokerages in coverage rate the stock a "strong buy," while the consensus 12-month price target of $17.64 is a 473% premium to last night's close. A round of bearish brokerage notes could pressure the stock even lower.

The shares could also encounter bigger headwinds, should short sellers continue ramping up their exposure to NBRV. Short interest surged 21.8% in the two most recent reporting periods to 1.20 million shares. However, this only represents a meager 4.8% of NBRV's total available float, indicating there is ample room aboard the bearish bandwagon. Regardless, shorts will likely be sidelined in today's trading, with the stock all but guaranteed a spot on the short-sale restricted list.


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