Analysts Raise the Bar as FibroGen Stock Breaks Out on Drug Data – Schaeffers Research (blog)

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The Dow Jones Industrial Average (DJIA) got off to a slow start this morning, but has since edged just high enough to extend its lengthy record-setting streak. Drug company Valeant Pharmaceuticals Intl Inc (NYSE:VRX), car rental service Avis Budget Group Inc. (NASDAQ:CAR), and pharma concern FibroGen Inc (NASDAQ:FGEN) are three stocks in the news this morning. Here’s a quick look at what’s moving shares of VRX, CAR, and FGEN.

VRX Put Options Active Post-Earnings

Valeant Pharmaceuticals stock is up 8.4% at $16.66, after the Bausch + Lomb parent topped analysts’ expectations with its adjusted second-quarter profit of $1.05 per share. Additionally, Valeant said it’s on track to trim $5 billion from its massive debt load earlier than the previously set February target date.

Traders were favoring weekly call options on VRX ahead of earnings, but it’s a put strike that’s attracting massive attention in the early innings of today’s session. Specifically, the VRX October 16 put has traded volume in excess of 10,200 contracts — an amount that represents nearly 25% of the stock’s average daily call volume.

CAR Tumbles on Earnings Miss

After the company’s adjusted second-quarter earnings fell short of expectations, Avis Budget Group shares are down 9.6% at $30.17. Options traders were paying up big to bet on CAR ahead of earnings. As of last night’s close, Schaeffer’s Volatility Index (SVI) of 85% registered in the 100th annual percentile, as the stock’s front-month options were pricing in some of the highest volatility expectations of the past year.

Leerink Looks for More Record Highs from FGEN

FibroGen stock has scored price-target hikes from no fewer than three brokerage firms, despite a second-quarter earnings report that generally missed Wall Street’s mark. Instead, traders and analysts are cheering upbeat drug data, as the company’s treatment for idiopathic pulmonary fibrosis aced a mid-stage trial.

The loftiest target comes courtesy of Leerink, which upped its price forecast to $82 from $52. The freshly revised target implies expected upside of 145% to the stock’s Monday close at $33.40 — but FGEN gapped sharply higher at the open today, and is currently up 50.9% to trade at $50.40. Earlier, the shares hit a new record high of $51.45.

FibroGen has yet to attract much of a following among options traders, but those who are speculating on the stock have adopted a bearish lean. Schaeffer’s put/call open interest ratio (SOIR) of 1.61 ranks in the 100th percentile of its annual range, pointing to a significant put skew among short-term options traders.  

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