3 Stocks Rewarding Short Sellers

WTW is pacing toward its worst day in two years

Nov 2, 2018 at 2:37 PM
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The Dow has explored a 500-point trading range on both sides of breakeven, as Wall Street digests the latest trade developments and a negative earnings reaction for Apple (AAPL). Among other stocks making notable moves are gene therapy specialist Adverum Biotechnologies Inc (NASDAQ:ADVM), Apple supplier Universal Display Corporation (NASDAQ:OLED), and weight loss name Weight Watchers International, Inc. (NASDAQ:WTW). Here's a quick roundup of what's moving the shares of ADVM, OLED, and WTW.

Adverum Biotechnologies Downgraded After Update

Adverum Biotechnologies said it has suspended the development of its A1AT deficiency gene therapy treatment, ADVM-043. Analysts have been quick to respond, too, with Cowen saying it was "disappointed" by the decision. Elsewhere, both Raymond James and SunTrust Robinson downgraded ADVM to the equivalent of a "hold," with the latter cutting its price target by $4 to $11.

In reaction, ADVM is down 28.6% to trade at $3.25, fresh off an annual low of $2.62. The shares have now sliced through short-term support near $4, and swung into the red on a year-to-date basis. Today's sell-off is good news for the short sellers that have stuck around, even though the equity is short-sale restricted (SSR) today. Despite falling 9.5% in the most recent reporting period, the 2.75 million Adverum Biotechnologies shares sold short represent five times the average daily trading volume.

OLED Stock Heads Toward Worst Day Ever

The shares of Universal Display are down 22.4% to trade at $100.58, after the smartphone display maker reported third-quarter profit of 48 cents -- well below the consensus estimate of 66 cents per share -- and cut its 2018 revenue forecast. Price-target cuts from Deutsche Bank (to $115) and Susquehanna (to $120) are only pouring salt on the proverbial wound, with OLED stock pacing toward its worst day ever.

Short sellers are certainly being rewarded by today's bear gap. Although OLED stock is on the SSR list, the 8.03 million shares currently dedicated to these bearish bets account for almost one-fifth of the stock's total available float, or 9.5 times the average daily pace of trading.

Weight Watchers Subscribers Dropped

Weight Watchers stock has plunged 28.8% to trade at $48.75 -- set for its biggest one-day loss since Feb. 26, 2016 -- after the Oprah-backed firm reported third-quarter profit and revenue misses, while subscriber growth declined on a quarter-to-quarter basis. WTW stock was hit with a round of negative analyst notes, too, including one to $63 from $100 at UBS.

Since topping out at a record high of $105.73 back in June, WTW has shed 53.7% -- and toppled below recent support at its 320-day moving average today. Short sellers have been in the drivers seat during this sell off, although they are sidelined today with Weight Watchers SSR. Short interest is up 33% from its early August low to 5.78 million shares, representing nearly 13% of the stock's available float.

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