With a buyout rumor reversing a downward trend and leading to a sharp increase in volume and share price, shares of Human Genome Sciences (HGSI) have been in the spotlight all week long.
The buyout rumor was sparked earlier this week when a newspaper report in the UK identified GlaxoSmithKline (GSK), Human Genome's marketing partner for the lupus-fighting drug Benlysta, as potentially ready to consummate the long-standing partnership with an acquisition offer.
Also caught up in the buyout speculation was Merck (MRK) and Biogen (BIIB).
Having opened the week trading mostly for under eleven bucks, a huge volume spike blew HGSI to a high of $15.07 as the UK news circulated, but Thursday's trading day saw shares retreat and close at $13.30. There's no doubt that after such an impressive move as experienced by HGSI in just a few days that a round or two of profit taking is going to occur, but investors will be watching Friday's action for an indication as to whether the run is over or if the trip back to the twelves and thirteens is an area of consolidation before another move higher on continued buyout hype.
Adding even more fuel to the fire is the Human Genome earnings announcement, set for early next week. Any hints of continued Benlysta sales momentum, such as seen in a report last month, could spark some additional short covering and add another lift to the HGSI share price in the midst of the takeover talk.
On the other hand, any disappointing developments - such as depressed earnings or nothing materializing from the GSK talk - could lead to a scenario where HGSI drops back to previously-traded levels just as quickly as they rose to the occasion.
Still one to watch going into the weekend.
Disclosure: Long HGSI.
Posted earlier at VFC's New Stock House.
