Analyst: Shutdown Could Hurt This Drug Stock

Walgreens and Microsoft are partnering for digital healthcare services

by Patrick Martin

Published on Jan 15, 2019 at 2:30 PM

Stocks are higher today on tech sector strength. Among names making particularly notable moves, Dow stock Walgreens Boots Alliance Inc (NASDAQ:WBA) and drugmaker Kitov Pharma (NASDAQ:KTOV) are higher, while biotech Aimmune Therapeutics Inc (NASDAQ:AIMT) is lower. Below, we'll take a look at what's moving the shares of WBA, KTOV, and AIMT.

WBA Jumps on Microsoft Partnership

While sector peer CVS Health (CVS) gets dumped by Walmart (WMT), Walgreens announced a seven-year deal with Microsoft (MSFT) to enhance healthcare delivery on the digital front. The collaboration will involve Walgreens utilizing Microsoft's cloud system Azure.

In response, WBA is up 1.8% to trade at $71.94, bringing its year-to-date lead to 5.1%. The shares are also trading back above their 20-day moving average, which helped usher the equity to an annual high of $86.31 in the fourth quarter. Plus, WBA has been one of the best stocks to own during a government shutdown.

In the options pits, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.01 ranks in the 86th percentile of its annual range. This points to a heavier-than-usual put-skew among short-term options traders, which could create tailwinds for WBA on an unwind.

Upbeat Cancer Drug Data Fuels KTOV Breakout

Kitov Pharma stock is up 109.5% to trade at $2.18, the best stock on the Nasdaq today by far, on positive data for the company's cancer drug NT219. KTOV is trading at its highest point since early August, and is on track for its best day ever. Year-over-year, though, the biotech name still has a 5% deficit.

Aimmune Therapeutics Stock Overdue for Bear Notes

Earlier this morning, RBC weighed in on the biotech sector, saying Aimmune Therapeutics may be the first company directly impacted by the government shutdown, as the marketing application for the drugmaker's peanut allergy treatment waits in limbo. AIMT was off as much as 6.3% earlier, but was last seen down 3.1% to trade at $23.56 -- a chip-shot from its Dec. 18 annual low of $21.38. A rally off this low at the start of the new year was swiftly rejected by the stock's 100-day moving average.

Despite shedding 40% year-over-year, analysts are bullish on AIMT. Of the eight brokerages in coverage, seven rate it a "buy" or better, with zero "sells" on the books. What's more, the equity's consensus 12-month price target of $55 is a 133% premium to its current perch, and sits in record-high territory. 

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