Short Covering Sparks HGSI Price Spike

| About: GlaxoSmithKline (GSK)

After briefly spiking during last year's closing months on a positive sales update for Benlysta and takeover chatter from across the pond, the heavily shorted shares of Human Genome Sciences (HGSI) dropped to below seven dollars at one point, before closing 2011 at just over that mark.

The tide has turned during the opening weeks of the new year, however, and heavy volume accompanied a near-20% price spike on Wednesday, potentially indicating a large round of short covering after representatives of Human Genome made positive comments relating to the overall 2011 sales of Benlysta, a trend expected to continue into 2012.

Benlysta is partnered with GlaxoSmithKline (NYSE:GSK) and is the first new FDA-approved treatment for lupus to hit the streets in over a half century.

It's likely that a quick move to over the ten dollar mark could again materialize if the recent demonstration of short covering continues, and there's always the potential for additional buyout talk to hit the wires for this perennial takeover candidate that could help the turnaround along.

This week's price run will again draw new interest to the company, but while Benlysta sales are increasing, investors should not expect HGSI to reach profitability for at least another 18 months or so, keeping it on the speculative list, but one that could pay off significantly later on down the road.

The short term future should be fun for this one, and it's another example of how quickly that the tide can turn in the stock market world for not only a share price reversal, but also in terms of media coverage. The same headlines that were negative for weeks when the shorts were pressuring the share price down have just as quickly turned positive.

Always fun, keep a watch on HGSI.

Disclosure: No position.

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Tagged: , Drug Manufacturers - Major, United Kingdom
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