The Commerce Department has banned U.S. component sales to China's ZTE
The U.S. stock market is trading notably higher to start the week. However, not all of the day's action is to the upside, with Merck rival Bristol-Myers Squibb Co (NYSE:BMY), ZTE supplier Acacia Communications, Inc. (NASDAQ:ACIA), and dietary supplements firm Cyanotech Corp (NASDAQ:CYAN) all trading lower. Here's a quick look at what's moving shares of BMY, ACIA, and CYAN.
Bristol-Myers Squibb Call Writer Lowers the Ceiling
Bristol-Myers Squibb stock has dropped 8.7% to trade at $53.53, after Merck's (MRK) immunotherapy Keytruda showed a better overall survival rate when combined with chemotherapy than the company's immunotherapy combination lung cancer treatment. The shares are now down 12.6% year-to-date, and testing the $53 level -- home to their July lows, and a 38.2% Fibonacci retracement of their October 2008 low at $17 and their July 2016 highs near $77.
Today's bear gap has sparked accelerated options volume with roughly 100,000 contracts traded --- five times what's typically seen, and volume is pacing in the 100th annual percentile. Trade-Alert highlights a possible bearish roll down, with a block of May 60 calls being sold to open at the same time a similarly sized block of May 65 calls was bought to close. And it looks as if the latter were initiated when a block of May 67.50 calls were rolled down last week when BMY stock breached the round $60 level.
Acacia Communications Stock Sinks to Record Low
Acacia Communications stock hit a record low of $24.72 earlier, and was last seen trading down 34.5% at $26.23 -- on track for its worst day ever. The security is selling off alongside its sector peers, after the Commerce Department initiated a lengthy ban on U.S.-made component sales to Chinese telecommunications equipment producer ZTE Corp, citing sanctions violations. Loop Capital called ACIA "perhaps the most exposed to ZTE."
ACIA stock is now below recent support in the $33 neighborhood and is staring at a 27.8% year-to-date deficit. A round of bearish brokerage notes could exacerbate these technical troubles, too. While nine of the 13 analysts covering the equity maintain a "strong buy" rating, the average 12-month price target of $44.82 represents expected upside of 71% to current trading levels.
Cyanotech Stock Plunges on Costs Warning
Cyanotech stock has plunged 15.3% to trade at $4.28, after a Securities and Exchange Commission (SEC) filing revealed the company said 2018 fourth-quarter and 2019 first-quarter costs have and will rise due to disruptive weather conditions. CYAN shares are pacing for their biggest one-day loss since February 2016, and are on track to close below their 200-day moving average for the first time since a Feb. 5 bull gap.
A number of short sellers are likely kicking rocks. Short interest fell 36.5% in the last two reporting periods, and these bearish bets now account for just 0.1% of the stock's available float.