Sarepta Therapeutics Inc (NASDAQ:SRPT)
Why are investors shorting Sarepta Therapeutics Inc (NASDAQ:SRPT)?
Sarepta Therapeutics is a newcomer to the most-hated list this month as it awaits final word from the Food and Drug Administration on its lead experimental drug, eteplirsen, for the treatment of Duchenne muscular dystrophy. Pessimists of this company believe its minimalist data (i.e., a relatively small mid-stage trial) could raise enough doubts on the FDA’s end to prevent eteplirsen from being approved. Earlier this month Sarepta shares dipped on news that the FDA wouldn’t accept the connection between an increase in the production of dystrophin and eteplirsen’s effectiveness, denying Sarepta an accelerated approval pathway for its drug. That connection pretty much needs to be established if Sarepta hopes to get its drug approved by the FDA!
Is this short interest deserved?
I’m not going to side with either the optimists or the pessimists here, opting instead to stay on the sidelines. The consequences of the FDA’s decision will certainly be devastating for one team or the other. A standard-speed approval isn’t too big of a setback for optimists, so I wouldn’t get too caught up in that aspect of eteplirsen’s road to filing its new drug application. The FDA panel’s findings and the ultimate ruling by the FDA are all that really matter; everything in between is just white noise.
Why are investors shorting NII Holdings Inc (NASDAQ:NIHD)?
Where to begin? NII Holdings, a wireless-service provider in Central and South America, has struggled mightily with high levels of debt, ballooning losses, lower per-user revenue, and tougher competition in highly saturated regions, just to name a few things. In addition, many regions in South America have installed 3G networks, which NII Holdings is only now rolling out — and finding to be a costly venture.
Is this short interest deserved?
Of the five companies mentioned here, I’d say NII is the one that deserves the pessimism most of all, especially following yesterday’s disastrous second-quarter earnings release. For the quarter, NII delivered an 11% decline in revenue to $1.26 billion as its losses ballooned to $2.30 per share from $0.60 per share in the year-ago quarter. Comparatively, Wall Street expected revenue of $1.38 billion and a much smaller per-share loss of $1.03. Worse yet, NII Holdings added another $1.6 billion in debt onto its books this year and now carries about $5.8 billion in debt. This situation could get much uglier before it gets better, and I would strongly suggest avoiding NII Holdings.
The article The Nasdaq’s 5 Most Hated Stocks originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Netflix.
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