Pharma Stock Boosted by Upped Guidance

Call traders are flocking to ALXN after the news

Deputy Editor
Oct 6, 2020 at 10:35 AM
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Alexion Pharmaceuticals Inc (NASDAQ:ALXN) is climbing higher today, up 3.7% at $119.50 at last check, after word that the company plans to raise its 2020 full-year guidance. On Oct. 28, the estimated third-quarter results date, Alexion plans to up its full-year revenue outlook by more than $200 million. Furthermore, the biopharmaceutical company anticipates a 2025 global revenue target of $9-10 billion.

Today's pop has ALXN nearing recent pressure at the $120-$121 levels, where the stock has been rejected numerous times since its annual high of $121.50 on June 1. Year-to-date, the equity is up around 10%, with support emerging at its 20-day moving average.

On the analyst front, nine out of the 16 in coverage sport a "buy" or better rating on Alexion stock, with the remaining seven at a tepid "hold." Meanwhile, the 12-month consensus price target of $141.32 is an 18.2% premium to current levels. 

Call traders are flocking to the drug maker after the news. So far, over 6,000 calls have crossed the tape, which is six times what's typically seen at this point and 22 times the number of puts traded. Most popular by far is the November 130 call, with plenty of traders betting on more upside from ALXN by the contract's expiration on the 20th. 

This penchant for calls isn't unusual considering the past 10 weeks, though there's a clear difference in volume. ALXN's 50-day call/put volume ratio of 7.31 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 96% of readings from the past year. This means that long calls have been picked up at a much faster-than-usual rate over this time period. Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) sits higher than just 1% of readings from the past year, suggesting traders have rarely been more call-biased.


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