bluebird bio Sinks on Earnings, Application Setback

Calls have been a favorite for bluebird options traders in the long term

Managing Editor
Feb 19, 2020 at 1:53 PM
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Gene therapy developer bluebird bio Inc (NASDAQ:BLUE) is down 9% at $80.64 in afternoon trading, sinking after weak fourth-quarter results and news its blood disorder therapy drug Zynteglo application was pushed back to the second-half of the year. Analysts have been far from happy with the news, BMO Capital saying the delay could send approval up to mid-2021. The firm cut its price target to $132 from $135 in response, while Stifel and Jefferies slashed their own price outlooks to $94 and $140, respectively. 

bluebird stock has struggled long term, with today's drop expediting the equity's journey back to below the 100-day moving average. This trendline was a brief leg of support in recent months, but was unable to alleviate BLUE of its 40% year-over-year deficit.  Regardless, today's sell-off has met a historical floor of support at the $80 mark.

daily blue with 100ma

Digging deeper, in the options pits calls still look to be a popular choice. Although amid lighter absolute volume, the stock's Schaeffer's open interest ratio (SOIR) comes in at 0.43, which ranks in the 10th percentile of its annual range. In other words, short-term options players have rarely been more call-heavy during the last 12 months. 

Ahead of today's shake-up, analysts were optimistic toward the drug name. Twelve of 16 covering firms carry a "strong buy" recommendation, with not a single "sell" on the books. Even further, BLUE's average 12-month price target of $135.89 is 69% above current trading levels.

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