Tinder Lights Match Stock on Fire; Plus, Should Celgene Pull a Tesla?

One analyst explains why Celgene could consider going private

Managing Editor
Aug 8, 2018 at 2:54 PM
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Stocks are a mixed bag today, with the Dow lower thanks to Disney (DIS), while the Nasdaq heads toward its seventh straight win. Biotech Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is struggling, but sector peer Celgene Corporation (NASDAQ:CELG) and online dating specialist Match Group Inc (NASDAQ:MTCH) are pushing higher. Here's a closer look at what's driving shares of REGN, CELG, and MTCH today.

CMS Decision Halts REGN Rally

At last check, Regeneron Pharmaceuticals stock was down 4.7% to trade at $372.86, after the Center for Medicare and Medicaid Services (CMS) stipulated that Medicare Advantage plans can require patients to try lower-cost drugs before opting for expensive alternatives. According to Leerink, this decision increases the threat of biosimilars among pharma companies.

On the charts, REGN has rallied 32% since its May 9 year-to-date low near $280. However, today's price action takes the shares below their year-to-date breakeven point, as well as their recently supportive 20-day moving average. 

In the options pits, traders seem prepared for such a pullback. Regeneron sports a Schaeffer's put/call open interest ratio (SOIR) of 1.13, showing put open interest outweighs call open interest among contracts that expire within three months. What's more, this reading ranks in the 90th percentile of its annual range, showing that the current skew toward puts is fairly significant.

CELG Stock Lifted as Analyst Suggests Going Private

Celgene stock is up 1.2% to trade at $91.39, after an analyst at RBC speculated on a scenario in which the biotech firm would go private -- inspired by Tuesday's instantly notorious tweets on the topic from Tesla (TSLA) CEO Elon Musk. Analyst Brian Abrahams believes going private could help Celgene "better capture trapped value and/or insulate it from public-markets volatility as it seeks to overcome challenges."

On the charts, Celgene shares have rallied 23% from their May 21 year-to-date low of $74.13. In recent sessions, CELG has broken out above its 160-day moving average for the first time since its October 2017 bear gap.

Options premiums look attractive at the moment, too. That's based on the security's Schaeffer's Volatility Index (SVI) of 21%, which ranks in just the 10th annual percentile -- showing muted volatility expectations for short-term options.

Furthermore, CELG has been a good target for premium buyers during the past year. That's according to its Schaeffer's Volatility Scorecard (SVS) of 92 out of 100, which shows the stock has tended to realize greater volatility on the charts than what the options market has priced in over the last 52 weeks.

MTCH Near Top of Nasdaq After Q2 Beat-and-Raise

Match stock is up a whopping 18.9% to trade at $46.24 -- one of the best stocks on the Nasdaq today -- after the company reported second-quarter earnings and revenue above analyst estimates, aided by a sharp rise in paid users on dating app Tinder. The dating app name also upped its full-year revenue guidance for 2018.

MTCH is on track for its biggest daily percentage gain ever, but peaked intraday at $46.94 -- a chip-shot away from its April 17 record high of $48.65. Overall, the security has more than doubled in value over the past year. 

A short squeeze could help push MTCH into uncharted territory. Short interest fell by 4.3% in the two most recent reporting periods, yet the 25.52 million shares sold short represents a hefty 50% of the security's total available float, and 13.3 days of pent-up buying power. 

 

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