Short Sellers Flee Questcor On Sentiment Reversal
Myriad Equity | Jun 17, 2013 02:33PM ET
The Takeaway
Questcor Pharmaceuticals’ business is primarily focused on their animal-derived corticotropin (or adrenocorticotropin, ACTH) gel product, known as H.P. Acthar Gel. Although attractive to the analysts that were covering the company based on financials, Questcor didn’t receive the kind of mainstream attention from the biotech investor community until Aetna took action against the company’s marketing practices.
QCOR stock has generally recovered from last year’s smackdown, which is why we’ve become less enthusiastic about the upside and more concerned about the potential for the company to disappoint. Third party prescription data shows that Acthar has been doing very well this month (especially last week) -- likely as a result of Acthar’s introduction to a number of new indications in recent months, although it’s worth noting that the “weak hand” shorts are likely to have covered at this point.
Also note that Questcor’s valuation has increased dramatically, and is approaching $3 B. Based on the new price per share, the new dividend yield of 2.2% does not draw nearly as much interest. Note that the yield was originally 4% after it was introduced by company management to discourage short selling of QCOR stock and the reassurance of shareholders of the company’s financial strength.
Questcor is still inexpensive based on the financial data that the company is producing, but the “easy money” has been made since the initial drop in September 2012.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.