Pepsi Fizzles After Earnings; Plus, 2 Red-Hot Pharma Stocks

By Patrick Martin / October 04, 2017 / www.schaeffersresearch.com / Article Link

U.S. stocks are mixed this morning, with the Dow touching fresh record highs yet again. Among the stocks making moves this morning are snack and drink giant PepsiCo, Inc. (NYSE:PEP), as well as pharmaceutical stocks Mylan N.V. (NASDAQ:MYL) and Amicus Therapeutics, Inc. (NASDAQ:FOLD). Here's a closer look at what's moving shares of PEP, MYL, and FOLD.

PEP Stock Fizzles After Weak Sales

Shares of PEP are lower, down 2% to trade at $106.93, after beverage giant reported third-quarter sales that fell short of Wall Street estimates. In addition, Pepsi cut its forecast for full-year organic revenue growth. The stock has now dropped nearly 6% in the past month, and today's negative earnings reaction is just more of the same for PEP shares.

At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PEP options traders have favored calls over puts by a bigger-than-usual margin lately. The stock sports a 50-day call/put volume ratio of 2.92, ranking in the 4 percentage points from a 52-week high. This indicates that PEP options buyers were picking up calls over puts at a faster-than-usual clip heading into earnings.

FDA Approval Has Mylan Stock Soaring

The Food and Drug Administration (FDA) today approved Mylan's generic version of Teva Pharmaceutical's (TEVA)Copaxone drug, to treat multiple sclerosis. As a result, MYL stock is up 18% to trade at $38.45, effectively erasing its earnings-inducedAugust tailspin that pushed the equity to a four-year low of $29.39 on Aug. 15.

A few recent option buyers could be kicking rocks. On the ISE, CBOE, and PHLX, Mylan stock has racked up a 10-day put/call volume ratio of 1.89 -- higher than 90% of all other readings from the past year.

Upbeat Drug Data Fuels FOLD Stock

Amicus Therapeutics stock is up 5.9% to trade at $15.74 -- and earlier notched a new two-year high of $16.60 -- after the firm released positive data for its Pompe disease drug. In addition, Baird issued a price-target hike to $18 from $16. FOLD stock is up a whopping 216% year-to-date, and had more than doubled in the past six months.

A short squeeze could add even more fuel to FOLD's run. Short interest increased by 4% during the last two reporting periods, to 34.67 million shares, its highest point since mid-July. This represents over 21% of FOLD's total available float, and it would take more than eight days for shorts to fully cover their positions, at FOLD stock's average daily trading volume. This is a major source of buying power that could provide additional tailwinds for the biotech stock.

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