A short squeeze could add fuel to the stock's fire
Several healthcare stocks are hot today, following the American Society of Clinical Oncology's annual conference, and Iovance Biotherapeutics Inc (NASDAQ:IOVA) is no exception. The company reported solid data for its cancer treatment for solid tumors, triggering a flood of upbeat analyst attention -- not to mention accelerated bullish betting in IOVA's options pits.
H.C. Wainwright lifted its price target to $32 from $26 -- roughly double IOVA's closing price of $16.35 on Friday -- as the brokerage firm waxed optimistic on Iovance's tumor-infiltrating lymphocyte (TIL) products. Likewise, Jefferies hiked its target to $33 from $29, and Oppenheimer raised its target by $5 to $30.
IOVA stock gapped higher on May 16, after the company said it would report the TIL therapy data at the ASCO conference. A "breakthrough therapy" designation from the Food and Drug Administration (FDA) for Iovance's cervical cancer treatment propelled the shares even higher on May 23, with IOVA notching an annual high of $19.07 last Friday, May 31. Today, the equity is up another 8.6% to trade at $17.76, and has now more than doubled year-to-date. This, even as the broader stock market suffered its worst month of 2019.
As alluded to earlier, IOVA option bulls are active today. The stock has seen more than 1,500 calls cross the tape so far -- more than double its average intraday volume. For comparison, fewer than 600 puts have traded today. Digging deeper, it appears some bulls are buying to open the June 20 call, which will move into the money if IOVA stock topples $20 -- territory not charted since late 2012 -- by the close on Friday, June 21, when front-month options expire.
Today's appetite for short-term calls runs counter to the security's current open interest configuration. Iovance sports a Schaeffer's put/call open interest ratio (SOIR) of 0.81, which is the highest reading of the past 12 months. In other words, while near-term call open interest exceeds put open interest on an absolute basis, the high percentile suggests near-term traders haven't been more put-heavy in the past year. An unwinding of pessimism in the options pits could fuel higher highs for outperforming IOVA.
A short squeeze could also add fuel to the fire. Short interest represents more than 14% of the stock's total available float, and would take more than six sessions to buy back, at IOVA's average daily trading volume.