Drug Stock Crushes Shorts After Big FDA Win

ICUI options bears are betting on bigger losses

Aug 8, 2019 at 2:29 PM
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Stocks are trading higher today as bond yields stabilize. Among individual names making notable moves are cybersecurity specialist Symantec Corporation (NASDAQ:SYMC), clinical-stage biopharmaceutical firm G1 Therapeutics Inc (NASDAQ:GTHX), and IV therapy provider ICU Medical, Inc (NASDAQ:ICUI). Here's a quick look at what's moving the shares of SYMC, GTHX, and ICUI.

Broadcom M&A Buzz Boosts Symantec Stock

Symantec stock is trading up 11.5% at $22.75 on reports the cybersecurity firm is in advanced talks to sell its enterprise business to Broadcom (AVGO). The Wall Street Journal said the deal could be valued at $10 billion, and comes just weeks after news broke that negotiations for AVGO's complete buyout of SYMC fell through -- which sent the shares tumbling 10.7% on July 15. Earlier, the security briefly traded above $23, but has not closed north of this mark since that mid-July bear gap.

Today's big gains appears to have one shareholder protecting paper profits against a quick retreat. Amid heavy trading today -- the 65,000 options on the tape so far is triple the expected intraday amount -- it looks like a stakeholder initiated a collar by selling to open weekly 8/9 23-strike calls while simultaneously buying to open the weekly 8/9 22-strike puts.

G1 Therapeutics Stock Trades Near Top of Nasdaq

The Food and Drug Administration (FDA) granted "breakthrough therapy" status to G1 Therapeutics' lung cancer drug, trilaciclib, which Cowen and Company said reflects the treatment's potential "to address an urgent unmet medical need." In reaction, J.P. Morgan Securities upgraded the stock to "overweight" from "neutral," and established a 2020 price target of $45 -- a premium to its 2019 price target of $38.

Against this backdrop, GTHX stock is trading near the top of the Nasdaq -- up 27.9% at $30.03, bringing its year-to-date gain to 56.9%. As a result, a short squeeze may be underway, considering a healthy 14.4% of the equity's float is sold short, or 7.6 times the average daily trading volume.

ICU Medical Options Hot During Sell-Off

ICU Medical is the worst Nasdaq stock this afternoon, off 33.8% at $162.74, earlier tagging a two-year low of $161.90. The sell-off comes after the company reported lower-than-expected second-quarter adjusted profit and cut its full-year adjusted earnings per share forecast. A downgrade to "outperform" from "strong buy" at Raymond James is only stoking the bearish flames, with the brokerage firm also slashing its ICUI price target by $90 to $205.

Today's bear gap has ICU Medical slicing through long-term support in the $220 neighborhood, and puts the shares in the red on a year-to-date basis. Options traders are betting on even more short-term losses for the stock, too. More than 1,200 options have changed hands on ICUI -- 15 times what's typically seen at this point -- with buy-to-open activity detected at the August 150 and 155 puts.

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