All the major money management firms that run exchange traded funds have to do regular quarterly rebalances to reset their portfolios to the proper allocation levels. When they do rebalance their holdings, it can introduce some big volatility to some of the stocks in the portfolio.
On the close Tuesday, Invesco will rebalance 15 of the firm’s PowerShares portfolios, which cover many of the major market sectors. A research note from the analysts at Cowen highlighted the top rebalance stocks by liquidity. We screened those stocks for the companies that would see the most amount of buying on a share basis, and four biotech companies stood out.
MannKind Corp. (NASDAQ: MNKD) is expected to see a massive buy of 2,230,300 shares of stock, which represents 40% of the 10-day average trading volume. The company has been an incredibly volatile stock over the past few years. MannKind finally launched its inhalable insulin product, which has been on the burner seemingly forever. The company’s marketing partner Sanofi has reported that demand has been higher than expected and that the sales force needs more samples for physicians.
The Thomson/First Call consensus price target for the stock is $8.66. Shares closed trading on Monday at $6.64.
Array BioPharma Inc. (NASDAQ: ARRY) is expected to see a gigantic buy of 1,826,800 shares, which represents 69% of the 10-day average trading volume. The company focuses on the discovery, development and commercialization of small molecule drugs to treat patients afflicted with cancer and inflammatory diseases primarily in North America, Europe and the Asia-Pacific. The company’s MEK inhibitors, binimetinib and selumetinib, are currently advancing in six Phase 3 trials, and Array’s partners expect the firm’s first regulatory filing this year with top line results from the other trials available in 2016.
The consensus price target is set at $10.14, and shares closed trading Monday at $8.20.
Infinity Pharmaceutical Inc. (NASDAQ: INFI) is expected to see a staggering 156% increase in the 10-day average volume when 956,700 shares hit the buy tape on the close. The company is an innovative biopharmaceutical dedicated to discovering, developing and delivering best-in-class medicine for difficult-to-treat diseases. Infinity combines proven scientific expertise developing novel small molecule drugs that target emerging disease pathways.
The consensus price target is $19.11. The stock closed Monday at $15.96 a share.
Omeros Corp. (NASDAQ: OMER) controls the worldwide rights to MASP-2 and all therapeutics targeting MASP-2, a novel pro-inflammatory protein target involved in activation of the complement system, which is an important component of the immune system. While actually more of a bio-pharmaceutical stock, it is expected to see a huge buy of 2,790,300 shares of the company’s shares, which represents an astounding 756% of the 10-day average trading volume.
The consensus price target is a stunning $40.40. Shares closed way below that on Monday at $25.10.
While the buying should be hot and heavy, these stocks that are really only suitable for very aggressive accounts. That said, buying in front of the close could give traders a little head start.
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