Behind 2 Drug Stocks' Huge Moves Higher

MNK and AVEO are making notable moves north

by Lillian Currens

Published on Sep 10, 2019 at 2:57 PM
Updated on Sep 10, 2019 at 4:44 PM

Stocks are trading below breakeven today, with the Dow set to snap its four-day win streak. Three stocks bucking this broad-market trend today are e-payment issue MoneyGram International Inc (NASDAQ:MGI), as well as drugmakers AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) and Mallinckrodt PLC (NYSE:MNK). Below, we'll take a look at what's driving the shares of MGI, AVEO, and MNK. 

MoneyGram Stock Extends Rally on Newest Payment Option

The shares of e-pay service MoneyGram have shot straight up this past month, and are now headed for their fourth consecutive win on news the company will offer a debit card-based option for transferring money, in partnership with Visa (V). The service, called Visa Direct, is currently only available in the U.S., but MGI is looking to expand to global markets in the future. The stock is up 4.9% at $5.58, at last check. 

The stock has been rallying hard since its late-May lows near $1.30, and are boasting an impressive 190% year-to-date gain. Analysts have yet to catch up to this price action, with only one brokerage maintaining a "strong buy" rating, compared to two "holds," and three "strong sells." What's more, the consensus 12-month price target of $3.83 is at a steep 31.6% discount to current levels. 

Mallinckrodt Stock Surges On Sale Agreement 

MNK stock is eyeing its biggest one-day gain on record, following the sale of the company's contract manufacturing unit. CEO Mark Trudeau also said he sees a "pathway to settle" an onslaught of opioid lawsuits the firm is facing. Last week, the stock slumped to an all-time low of $1.43 on news MNK was considering seeking bankruptcy in the face of the litigation. The stock is eyeing its third straight win today, up 76.7% at $3.71. 

The sale has options traders rushing in from both sides, with 6,767 puts and 22,303 calls across the tape so far, double the intraday average. The January 2020 1-strike put is seeing the most action, with most of these contracts likely being sold. The weekly 9/13 3.50-strike call isn't far behind, with some buy-to-open activity detected here, suggesting that these bulls are expecting even more upside for MNK. 

AVEO Hits Four-Month High On Drug Data

Promising data from  AVEO's late-stage kidney cancer drug trial has the shares eyeing their biggest one-day jump since June 2017. The stock hit a new four-month high of $1.08 earlier, too, and is set for its first close north of its 180-day moving average this year. Most recently, AVEO is up 47.2% at $1.04. 

Longer term, the stock is still down 36.3% year-to-date. Short sellers have been cashing out during this slide, with short interest down 33% from its mid-April high of 26.78 million shares. Bears are still in control, though, considering the 17.94 million shares still sold short represent a solid 11.2% of AVEO's available float.


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