(Bloomberg) -- Bears are doubling down on bets against Teva Pharmaceutical Industries Ltd as legal woes loom over the generic drugmaker and the stock trades at 19-year lows.
Short interest has more than doubled since the Israel-based pharmaceutical company reported earnings. More than 36 million shares are short, up from 18 million in early May, according to data from financial analytics firm S3 Partners. Teva is among companies, like Apple Inc. or Amazon.com Inc, where it is easy to borrow stock at the cheapest rate, said Ihor Dusaniwsky, S3’s managing director of predictive analytics.
Teva’s American depositary receipts sank as much as 9.1% Wednesday after an Oklahoma judge this week sought changes to an $85 million settlement over opioid painkillers. Analysts quickly jumped to Teva’s defense, saying the refusal was more of an administrative issue over how the funds were distributed rather than a likely change to the settlement amount.
Investors are also focused on charges of price fixing against generic drug makers. “Teva’s perceived exposure is high,” RBC analyst Randall Stanicky wrote in a note to clients. With an opioid case in Ohio set to start in October and price fixing as a longer-term issue, Stanicky expects “headline risk around both to linger for the foreseeable future.”
Teva options were among the most active single-listed contracts in early trading, led by the December $7 puts, which represents a drop of about 20% from the current share price.
To contact the reporters on this story: Cristin Flanagan in New York at firstname.lastname@example.org;Gregory Calderone in New York at email@example.com
To contact the editor responsible for this story: Catherine Larkin at firstname.lastname@example.org
©2019 Bloomberg L.P.