Biotech Stock Rises on Lofty Piper Sandler Bull Note

ILMN has gained over 39% in three months

Digital Content Manager
Dec 22, 2020 at 11:08 AM
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The shares of Illumina Inc. (NASDAQ:ILMN) are up 3.2% at $374.30 at last check, after the biotechnology concern received an upgrade from Piper Sandler to "overweight" from "neutral," as well as a price-target hike to $415 from $340. The analyst in coverage expressed confidence over cancer testing firm Grail's portfolio, which was purchased by Illumina in September. What's more, the firm said competition concerns with customers in the oncology space are overblown, and that COVID-19 vaccine approvals will reduce potential headwinds to its core business.

Illumina stock has had a volatile year so far. The shares more than doubled off their March 18, three-year lows of $196.78 to hit an Aug. 5 all-time-high of $404.20. A number of bear gaps ultimately knocked the security off those levels, however. Yet, the stock has been chopping higher on the charts of late, with support from the 20-day moving average. And in the last three months alone, ILMN has gained over 39%. 

Analysts were pessimistic toward the security coming into today, with 11 of the 16 in question carrying a tepid "hold" or worse rating. Echoing this is the stock's 12-month consensus target price of $315.75, which is a whopping 15.9% discount to its current perch. Should some of these bears follow Piper Sandler's lead, it could put additional wind at ILMN's back.  

That pessimism is reflected in the options pits, where puts are popular. This is per the security's 10-day put/call volume ratio of 2.81 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 97% of readings from the past year. In simpler terms, puts are being picked up at a quicker-than-usual clip.

Today's bull note may be shifting the tide, however. So far, over 1,000 calls have already crossed the tape, which is twice the average intraday amount. Most popular is the 12/31 375-strike call, followed by the 12/24 370-strike call, with new positions being opened at both.

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