Drug Stock Scales Nasdaq, Squeezes Shorts on Upbeat Trial Data

Plus, MCD just acquired a digital start-up from Israel to amp up its drive-thru

by Patrick Martin

Published on Mar 26, 2019 at 3:15 PM

The Dow is modestly higher today, thanks to a resurgent tech sector. Of the stocks making particular noise today, blue chip McDonald's Corp (NYSE:MCD), biotech Aldeyra Therapeutics Inc (NASDAQ:ALDX), and mining name Freeport-McMoRan Inc (NYSE:FCX) are all climbing. Here's a quick look at what's got the shares of MCD, ALDX, and FCX moving higher today.

McDonald's Buys Dynamic Yield

Late Monday, McDonald's announced its acquisition of Israeli digital start-up Dynamic Yield, which MCD will use to help personalize and enhance the customer experience by making its drive-thru menus more dynamic. In response, MCD is up 0.8% to trade at $187.15 today, on track for its highest close in two months. Despite only boasting a 5.4% lead year-to-date, the equity has turned in only three weekly losses in 2019.

Options are an intriguing route for prospective MCD traders, given their affordability at the moment. The stock's Schaeffer's Volatility Index (SVI) of 17% ranks in the 24th annual percentile, showing lower-than-usual volatility expectations are priced into near-term contracts.

Outstanding Eye-Drug Trials Power ALDX to Best Day in Years

Near the top of the Nasdaq sits Aldeyra Therapeutics, up 40% to trade at $9.96, and on track for its best day since September 2017. ALDX has now broken out of a channel of lower lows that culminated in a seven-month closing low of $7.14 on Monday.

Fueling the surge is the company's eye drug reproxalap, which met its main and secondary goals in a late-stage trial. The next steps for the treatment will be discussed later in 2019, but Cantor Fitzgerald was sufficiently encouraged to hike its price target to $35 from $30 while reiterating its "buy" rating.

Today's sharp gains are likely being fueled by a short squeeze. Short interest fell by 22% in the last two reporting periods to 680,000 shares -- but still represents a healthy 14.5% of ALDX's total available float, or 2.2 times the equity's average daily volume.

FCX Stays Hot Despite Price-Target Cut

Freeport McMoRan stock is up 2% to trade at $12.62, shaking off a price-target cut to $12.50 from $13 at Deutsche Bank. Despite adding 22.4% year-to-date, FCX has spent the past month trading in a tight range between $12 and $13. In the past two weeks, the equity has turned in only two negative sessions, both of which were cushioned by support at its rising 50-day moving average.

Broader analyst sentiment can best be described as middling. Five brokerage firms rate FCX a "buy" or better, and six rate it a "hold" or "strong sell." Likewise, the security's 12-month consensus price target of $14.23 sits in territory not seen since early October. but represents a fairly modest 12.8% premium to FCX's current price.

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