• Research

Nov 8, 2016

S3 BLACKLIGHT: Allergan Stock Price is in Need of Botox

Allergan PLC (AGN US) short interest hit $3.3 billion today as short sellers continue to pound the stock after it reported poor 3rd quarter results last week. Allergan reported 3rd quarter EPS of $3.32 which was down $0.09 from a year ago and missed analyst estimates by $0.36. In addition to missing its 3rd quarter target, Allergan also lowered its full year EPS guidance from $13.75/$14.20 to $13.30/$13.50. These new figures will miss analyst’s target of $13.94. In response to the miss Allergan’s stock price hit a year to date low of $188.82. The stock has recovered since 11/3 and is presently trading at $197.41, down 2 since 11/3 and is presently trading at $197.41, down 37% on the year.
 
Allergan’s short interest of $3.3 billion is up $1.9 billion, or 136%, since the beginning of the year and the first time over $3 billion since it hits its historical high of $7.9 billion in March of 2015 at the conclusion of the Valeant Pharma versus Actavis Pharma takeover battle.
 
Allergan short interest had been trading in a $1.3 billion to $1.7 billion range until the end of August. In September, short interest increased over $500 million and topped $2 billion for the first time in almost two years. After hitting $2.3 billion by the end of October, short interest is up $1 billion in just over a week.
 
Shorts are continuing to build their positions but stock is still trading at general collateral levels, the cheapest stock borrow for the easiest to borrow stock, and there is no fear that this stock will get expensive at any time soon as less than 20% of borrowable stock has been taken down so far.
 
With its stock price still dropping, Allergan shorts are still active today with almost 400,000 shares shorted this morning. At this rate, short interest will be over $3.5 billion by the end of November.
 
For more information on the above analysis, please contact:
Ihor Dusaniwsky, Head of Research, S3 Partners, LLC     Ihor.Dusaniwsky@S3Partners.net

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.


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