Berenberg Bets on a Bounce for This Biotech Stock

The analyst initiated coverage with a "buy" rating and lofty price target

Biotech concern Xencor Inc (NASDAQ:XNCR) is higher today, after Berenberg Capital Markets initiated coverage with a "buy" rating and a $45 price target, which represents an almost 50% premium to Tuesday's close at $31.54. The brokerage firm predicts a rebound for XNCR, and waxed optimistic on the company's Ultomiris and MOR-208 treatments. As a result, the stock is up 2.3% at $32.26 in afternoon trading.

From a longer-term perspective, though, XNCR has been in a channel of lower highs since hitting its all-time peak of $48.38 in mid-September. XNCR just bottomed out at a 10-month low on March 14, but has run into a wall around the $32- $33 level -- a former layer of support and now home to the stock's descending 50-day moving average.

Despite XNCR's struggles, Berenberg is far from alone in the bulls' corner. Before today, the stock boasted six "strong buy" ratings, and only one "strong sell." Plus, the $42.75 consensus 12-month price target represents a 34% premium to current levels, and an area not charted by the stock since November.

Should the analyst's prediction come to fruition, a short squeeze could be in the cards for Xencor. The 2.96 million shares sold short currently represent a healthy 6.5% of the stock's available float. At the equity's average daily trading volume, it would take a little under two weeks for short sellers to buy back all of these pessimistic positions.