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Shorts reported loading up on Pfizer after buyout stories

March 2, 2017

Shares of Pfizer (PFE) were snapped up by short sellers who have been banking on rumors the company is planning to make multiple acquisitions that could send the price of the stock higher before selling off shares to make a quick profit.

Since the beginning of February, shares of Pfizer have steadily climbed from $31.15 on Jan. 24 to this morning’s price of $34.70. During the January 31 and February 15 settlement dates, Benzinga reported the number of Pfizer’s shares “short surge more than 300 percent to more than 137.21 million.” It’s the most short-seller interest shown in Pfizer since April 2016, Benzinga noted.

Pfizer has been rumored to have several potential takeover targets, including Bristol-Myers Squibb (BMY) and Mylan (MYL).

However, some analysts have dismissed the idea that Pfizer is a serious candidate for global pharma giant Bristol-Myers Squibb. Deutsche Bank’s Gregg Gilbert and Esther Rajavel said in a blog post on Barron’s that the size of the investment it would make to acquire BMS might be the issue. Such an acquisition “would represent a very large and concentrated opportunity/risk ($90 billion market cap + a premium) on immuno-oncology, an area fraught with near-term uncertainty, and one in which PFE already has at least a partial strategy in place,” the analysts said. While the Deutsche Bank analysts suggested $90 billion as a target price for BMS, some analysts have predicted the company could sell for as much as $120 million. BMS has gone from the fourth most valuable pharmaceutical company in the United States to the ninth, according to a recent report by Bloomberg. Much of that has to do with a major setback the company had last year with its lead PD-1 inhibitor Opdivo.

Earlier this month, there were also rumors that Pfizer was looking to acquire Mylan, the company behind the EpiPen Auto Injector. Those rumors caused shares of Mylan to spike on Feb. 3, Benzinga said.

None of these rumors have been substantiated by either company, but they were making the rounds via social media, CNA Finance reported. It’s not the first time that Pfizer has been rumored to be interested in taking over Mylan. In 2015, Mylan Executive Chairman Robert Coury said he viewed Mylan as a good fit for Pfizer.

Pfizer has been an active M&A player. Earlier this month, Pfizer acquired a 16.4 percent stake in San Clemente, Calif.-based ICU Medical (ICUI) as part of an earlier deal for ICU Medical to acquire Pfizer’s Hospira Infusion Systems (HIS) business. In August 2016, the company bought Medivation (MDVN) for $14 billion.

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