Healthcare Business

Is Infinity Fully Valued Now, or Is More Upside Left?

The stock chart for Infinity is one that is full of volatility in the past two years. This stock was above $45 less than two years ago. The stock was also trading under $10 for much of 2014. This fresh move took the stock well above the key 200-day moving average for the first time in quite a while (see StockCharts chart below), and we would point out that the 200-day moving average had been a point of very firm resistance on three different waves before this news broke.

Another issue is that the stock options trading volume has not been favorable to the bullish traditional hopes. If you go out to October, the $12 puts saw more than 5,200 contracts trade, versus an open interest of 1,131 contracts. There were more than 1,800 call contracts that traded in the $12 strike price as well. If you go out to the January strike prices, only about 7,500 contracts had traded in the various strike prices in the call options, and that was nearly matched by the put volume.

Analysts may be ratcheting up their expectations and targets ahead, or they may not. The consensus analyst price target was $15.56 for Infinity. The lowest analyst target was down at $9 and the highest was $20. This means that the current view is one that is very mixed, even if the price targets are handily raised in the next day or week in the wake of the news.

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One thing that the bulls may point out is that Infinity’s short interest had fallen significantly, signaling that the bearish stance against Infinity was one that traders and speculators were getting out of the way of. The August 15 short interest was down to 3.59 million shares from 4.128 million shares short at the end of July, and down from 4.67 million shares short in mid-July. In fact, the short interest was the lowest reading for all of 2014.

The headline grabber may be ruling the roost here in Infinity. The headline sounds bullish. The options trading may be cautious, the chart looks bullish and the short interest trend signals that the bears got out of the way (maybe anticipating news).

Infinity shares were up 50% at $16.38 on 12.7 million shares as of 1:45 p.m. Eastern Time. The stock’s 52-week trading range is $8.40 to $21.60. On top of the chart shown below, we have also included an image showing Infinity’s product candidate pipeline and the company’s clinical trial news.

INFI chart
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