No fewer than four price-target hikes came through overnight
Axsome Therapeutics Inc (NASDAQ:AXSM) stock surged more than 70% yesterday after the company said its major depressive disorder drug succeeded in a late-stage study, and it plans on filing for a marketing application with the U.S. Food and Drug Administration (FDA) in the second half of next year. The shares closed at a record high of $79.80, and had analysts rushing to raise their AXSM price targets.
The most optimistic outlook so far has come from H.C. Wainwright, which lifted its price target on the biopharmaceutical stock to $170 from $30 -- a 113% premium to last night's close. Price-target hikes also came through at Guggenheim (to $158), SVB Leerink (to $95), and SunTrust Robinson (to $100), with the latter saying AXSM's treatment will "likely be the go-to drug for those who don't respond to first-line antidepressants.
Analysts are already overwhelmingly bullish toward AXSM stock, with all seven in coverage calling it a "strong buy." Additionally, the average 12-month price target for Axsome Therapeutics is docked at $123.29, representing expected upside of 55.5% to current levels.
Long calls have been preferred over puts in recent weeks, too, signaling optimism among options traders. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AXSM's 10-day call/put volume ratio is perched at a top-heavy 1.25.
However, given how heavily shorted Axsome Therapeutics stock is, it's possible some of this recent call buying came at the hands of short sellers hedging their bearish bets against any upside risk. Short interest on AXSM climbed 2.4% in the most recent reporting period to 6.1 million shares. This represents 23.2% of the equity's available float, or 5.6 times the average daily pace of trading.
As such, it's also possible shorts had a hand in yesterday's bull gap, as t.hey rushed toward the exits. Today, the overbought stock -- whose 14-day Relative Strength Index (RSI) was last seen at 87.3, just shy of its early December annual high of 88.91 -- is down 0.6% at $79.30.
