Shares of Novavax, Inc. (NASDAQ:NVAX) have jumped 16.1% to trade at $2.51 — fresh off an annual high of $2.75 — after the drugmaker reported positive early stage study results for its flu vaccine, NanoFlu, in patients 60 years or older. NVAX stock has now nearly doubled in value on a year-to-date basis, putting the pressure on stubborn analysts to upwardly revise their ratings.
In fact, of the eight brokerages covering the shares, six maintain a lukewarm “hold” rating. This skepticism is seen elsewhere, with nearly 16% of NVAX’s float sold short — representing six times the equity’s average daily pace of trading.
Options traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open the March and April 2 puts in recent weeks. And while this could be indicative of traders betting on a short-term retreat, it could also be the result of NVAX shareholders initiating an options hedge against any unexpected downside.
Fellow drug stock Portola Pharmaceuticals Inc (NASDAQ:PTLA) is also making a volatile move today, only its price action is to the downside. At last check, PTLA shares were trading down 27% at $30.84, after the Food and Drug Administration (FDA) asked for additional data for the company’s study of AndexXa — a treatment for those with inhibitor-related life-threatening bleeding.
Analysts were quick to chime in, with Morgan Stanley downgrading PTLA to “equal weight” from “overweight,” and more than halving its price target to $30 from $65, saying the program could face a years-long delay if the FDA requires a pre-approval study. Oppenheimer also cut its price target, to $67 from $72.
The shares are now pacing for their worst day since March 24, 2016, and are staring at a 36.2% year-to-date deficit. Should Portola Pharmaceuticals stock continue to struggle, more negative analyst notes could be on the way. While the majority of covering brokerages still maintain a “buy” rating on PTLA, the average 12-month price target sits at a lofty $56.50.
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