Analysts are weighing in on drug stocks Bristol-Myers Squibb Co (NYSE:BMY), Merck & Co., Inc. (NYSE:MRK), and Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Here's a quick roundup of today's bearish brokerage notes on shares of BMY, MRK, and VRX.
Jefferies cut its price target on Bristol-Myers Squibb stock to $68, though this still sits above the equity's Oct. 13 annual high. After notching that notable milestone, though, the shares pulled back to their 80-day moving average -- a trendline that's served as both support and resistance in the last 12 months, and is currently perched near BMY's early September bull gap lows. This time around, it's creating a floor for BMY shares, which were last seen trading up 0.2% at $61.07, bringing their year-to-date lead closer to 5%.
Options traders, however, have been betting on a bigger retreat in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 1.11 ranks higher than 94% of all comparable readings taken in the past year, meaning puts have been bought to open over calls at a faster-than-usual clip.
Jefferies also lowered its price target on MRK -- to $53. This represents a discount to last night's close; however, the stock is up 0.3% this morning at $54.97, after the drugmaker announced a strategic research collaboration with T-cell specialist Cue Biopharma.
This negative outlook isn't too surprising, though, given Merck stock's recent technical struggles. After bumping into familiar resistance near $66.40 in mid-September, the shares have plunged 17.5% -- due to back-to-back Keytruda-related bear gaps last month -- and hit a 12-month low of $54.41 yesterday. As such, the Dow stock's 14-day Relative Strength Index (RSI) closed Wednesday at 24, well into oversold territory, which may explain today's pop.
Valeant Pharmaceuticals stock has swung 1.3% lower to trade at $14.26, after Deutsche Bank cut its price target on the shares to $18 from $19. Despite a recent earnings-induced bull gap, the equity is staring at a nearly 19% year-over-year deficit, and there's plenty of room for more bearish brokerage notes to come down the pike -- and spark potentially volatile price action. Of the 13 analysts covering the shares, four still maintain a "strong buy" rating. Plus, the average 12-month price target of $16.06 stands well above VRX stock's current trading levels.