MannKind Corp. (NASDAQ: MNKD) is just about as controversial of a company as you will find today when it comes to biotech and pharma. Its recently launched Afrezza has had disappointing initial sales under its Sanofi (NYSE: SNY) pact. After looking at the recent recovery, and after looking over the more recent news that has come out after earnings, 24/7 Wall St. wants to see if MannKind shares have finally reached their bottom.
The first thing that 24/7 Wall St. would like to convey is that this is far from a call that an imminent massive blast off is coming in MannKind shares. When bottoms get formed, they are often fighting points between bulls and bears (buyers and short sellers) for weeks or months. And then there is the argument that you never know if it was a real bottom, not for weeks or months, if not longer.
A recent report from Jefferies has highlighted a serious issue. More than one-third of doctors surveyed who treat diabetes patients were not even aware that the inhalable insulin drug delivery was available. Afrezza just has yet to even get into the market place, and an advertising campaign may strongly boost the interest. When Jefferies reiterated its Buy rating, it also kept a $9.00 price target.
Back on May 11, JPMorgan downgraded MannKind to Underweight from Neutral. Shares were at $3.81 the day before the analyst’s negative call, and they closed at $3.63 on the day of that call. Still, shares then fought over a close of $3.63 to $3.65 for three more trading days. Then the stock rose to $4.00, to $4.40 and then to $4.80.
Picking a bottom or a direction in a company like MannKind is very difficult to do on a daily basis. Still, when you see a recovery from a 52-week (and multiyear) low of $3.46, it cannot be ignored, even if more selling is possible. That represents a pop of 38% from recent lows. Even for a small $1.9 billion company, it is hard to say this is chump change.
Goldman Sachs remained very negative with a Sell rating on May 11, cutting its bearish $3.00 price target down to an even worse $2.00. What investors will want to know, and what many of MannKind’s bullish investors will say and have likely said in chat rooms, is that this analyst reportedly has been very biased in the negative calls. We are staying out of that, but the caveat balances it out.
To prove the point that the bull-bear fight may only become amplified: MannKind shares were down as low as $4.53 on Wednesday morning, a give back of 5% earlier in the day. At $4.62 in Wednesday afternoon trading, MannKind has a 52-week trading range of $3.46 to $11.48. The consensus analyst target price is $6.68, but note that there is a huge band of target prices, from as low as $2.00 to well over $10.00.
Short sellers have likely been part of the culprit for the massive rally in MannKind shares from the 52-week low. NASDAQ.com shows that the most recent short interest hit a new recent high of some 100.9 million shares, as of the end of April. That is about 20 days to cover and it is roughly one-fourth of the total outstanding shares.
One last saving grace may be here for MannKind investors on a longer-term basis. MannKind is not even a $2 billion market cap at this time, yet Sanofi is a mega-cap worth over $100 billion. Many investors are banking on the notion that if things ever get too bad or if MannKind needs assistance, perhaps Sanofi would just acquire it. Still, that is far from anything official.
Below are some of the headlines from other news agencies and online sources covering MannKind in recent days:
- MannKind stock jumps on positive report about inhaled insulin (Los Angeles Times, 5/19)
- MannKind Corporation: Afrezza Is Better Than Weak Launch Suggests (Seeking Alpha, 5/19)
- Wall Street Analysts Sell The Bottom In MannKind (Benzinga, 5/19)
- MannKind’s Huge Short Interest Sets Up Contrarian’s Dream Buy (Forbes, 5/19)
- Traders Get Bullish on Shares of MannKind (Financial News Network Online, 5/19)
- MannKind in Focus: Stock Rises 10.1% in Session (Zacks, 5/19)
- MannKind Up 9.6%, Shares Break Through Resistance (Comtex SmarTrend, 5/18)
- Inhaled Insulin: How MannKind Corporation Can Make It Work Better Than Pfizer (Bidness Etc., 5/18)
- MannKind Corporation is Trading Higher on Unusual Volume for May 15 (Equities.com, 5/16)
- MannKind Stock Soaring Following Jefferies Note (TheStreet, 5/15)
- MannKind Up 6.7%, Shares Break Through Resistance (Financial News Network Online, 5/15)
- Short Sellers Start to Get Nervous on Biotech (24/7 Wall St., 5/12)