In this piece, we will take a look at the 10 most shorted stocks that are loved by analysts.
Short selling is one of the more controversial ways of making money on the stock market. While typically investors buy and hold stocks with the belief that the price will increase in the future, most short sellers bet against the shares after conducting research that suggests weaknesses within a firm’s business model and fundamentals. Naturally, this leads to detractors of the practice arguing that the very act of revealing a short position can negatively affect the target firm’s share price, while the proponents claim that short selling promotes market efficiency and lets diligent investors capitalize on their research skills.
Additionally, while some of the most famous short sells are of smaller firms, large positions often exist in well known and sizeable companies as well. Data shows that as of April 2024, America’s seven largest stocks with a market capitalization of $13.5 trillion also accounted for 12% of the total short interest in the market. This figure sat at $127 billion, and despite the fact that these big ticket technology stocks have soared in 2024, the short interest also jumped by $18 billion during the year from its value of $109 billion at 2023’s close. In percentage terms, this marked a 17% gain which was noticeably higher than the 5% gain for the tech heavy NASDAQ exchange during the same time period.
Of course, just because the value of short interest has grown doesn’t mean that investors are actually shorting more shares. This is because as the value of the target short rises, so does the short interest due to principles of mark to market accounting which values an asset at its latest market price. Within this $18 billion short interest increase between January to May, the majority, or $11 billion was a mark to market increase while $7.1 billion came through new positions being opened.
For short sellers and those watching the US stock markets, May 2024 was an interesting month. This is because it marked the return of the pandemic era meme stocks. These stocks, such as those that belong to video game retailers or entertainment chains, saw Wall Street and retail investors come head to head over the fate during the pandemic as the latter drove their prices up to inflict losses on the former that had shorted the shares. In May, a fresh note from research firm S3 Partners outlined that positive share price movements of heavily shorted video game retailing stocks ended up dealing a massive $838 million in mark to market losses in a single day to short sellers that were otherwise having a profitable 2024.
For the month, these losses stood at $1.24 billion, and they highlighted the power of the Internet which allows retail investors to team up and battle large institutional players shorting the stocks that they love. However, at the same time, analysts also cautioned that while the recent short squeezes were reminiscent of the mania in 2021, they were unlikely to either last as long or be as forceful due to the tighter monetary policy which makes access to capital difficult and costly.
With these details in mind, let’s take a look at some stocks that have a high short interest but equally high price share price targets, which suggests a difference of opinion between what the markets are doing and what the analysts are thinking.
Stocks
Our Methodology
To make our list of the most shorted stocks that are loved by analysts, we made a list of stocks with average analyst ratings of Strong Buy, a short interest as a percentage of their float that was greater than 20%, and a market capitalization greater than $300 million. The stocks were ranked based on their average analyst share price target upside.
10. Prime Medicine, Inc. (NASDAQ:PRME)
Short Interest Percentage: 22.64%
Average Share Price Target: $14.1
Share Price Upside: 124.52%
Prime Medicine, Inc. (NASDAQ:PRME) is a backend gene editing company that enables partners to develop treatments for diseases such as leukemia. Key to the firm’s ‘story’ is its treatment for chronic granulomatous disease (CGD) called PM359. and the shares jumped by close to 10% in May after Prime Medicine, Inc. (NASDAQ:PRME) announced that PM359 had cleared the FDA’s requirements for an investigational new drug (IND). The stock jumped by an additional 14% after Prime Medicine, Inc. (NASDAQ:PRME) released its earnings report for the first quarter. The release hinted that the first patients could take its gene editing drug in 2024, opening the way for potential commercialization if the results were positive.
However, results from PM359’s clinical trial are expected in 2025, pushing any significant commercialization related catalysts in the future. After the PM359’s FDA IND win, Jefferies set a Buy rating for the shares and a $15 share price target. The firm noted that Prime Medicine, Inc. (NASDAQ:PRME)’s FDA clearance ‘de links’ PM359 from the regulatory risks that face other drugs in its pipeline. It added that Prime Medicine, Inc. (NASDAQ:PRME)’s pipeline could be worth as much as $2.7 billion.
9. 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT)
Short Interest Percentage: 21.99%
Average Share Price Target: $52.3
Share Price Upside: 129.59%
4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) is a small biotechnology company developing treatments for lung diseases, macular degeneration, and other ailments. It’s one of the few stocks on our list that is actually up year to date. This is courtesy of an 84% share price jump in February. This came after 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT)’s gene therapy treatment for eye disease that causes spots in older adults. The treatment is called 4D-150, and 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) had shared that high doses of the drug reduced injection rates in patients. The next set of data for 4D-150 came in June when 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) shared that a dose escalation trial led to stable visual acuity in patients.
BMO Capital’s bullish note in June 2024 focused on another 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) treatment. This treatment is 4D-710, a gene treatment for lung fibrosis. BMO shared that while it’s possible that 4D-710 is a safe and effective treatment, it is not relevant to 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT)’s valuation. The firm kept an Outperform rating on the shares and a $63 share price target.
8. Enovix Corporation (NASDAQ:ENVX)
Short Interest Percentage: 31.29%
Average Share Price Target: $29
Share Price Upside: 132.74%
Enovix Corporation (NASDAQ:ENVX) is an American battery manufacturer headquartered in Fremont, California. A small battery company that raked in just $7.6 million in revenue in 2023, Enovix Corporation (NASDAQ:ENVX)’s fate depends on its ability to break into the highly competitive Asian battery manufacturing market and scale up its operations to meet the volume and quality requirements of the electric vehicle, smartphone, and other industries. Naturally, this also means that a lot of investors are betting against the stock as evidenced by Enovix Corporation (NASDAQ:ENVX)’s short interest percentage. The shares are also reflective of this fact, as they jumped by a whopping 45% in May 2024 after the firm announced that it had signed a deal to supply one of the world’s five largest smartphone companies by volume with its EX-1M batteries. The products will be manufactured at Enovix Corporation (NASDAQ:ENVX)’s Fab2 plant in Malaysia, and the first samples were shipped in mid May.
During the latest earnings call, management was clear on why the battery deal presents a huge opportunity for Enovix Corporation (NASDAQ:ENVX):
The smartphone battery leadership opens a $12 billion opportunity for Enovix. If you look at the top bar on the slide, you can see all the OEMs that shipped around 1.2 billion smartphones, in 2023. The top eight of them represent a, $1 billion units, which is 80% of the volume. Now, of the $12 billion lithium-ion battery TAM in smartphones, $9.5 billion is among this top eight. Collectively, they produced 280 plus models of smartphones, which means an average smartphone unit volume of 3.5 million units per model. So, three or four models of this will take a full line of ours.
Now, six of the top eight of these OEMs are going to receive samples from EX-1M smartphone battery from us. So, that $7.5 billion of smartphone battery TAM is actually represented here. So, we’re in great shape as you can see with the market leaders, something that is a priority for me when I joined the company last year, to focus on the largest part of the battery market.
7. ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC)
Short Interest Percentage: 25.05%
Average Share Price Target: $19
Share Price Upside: 164.62%
ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) is a biotechnology company that is developing a host of cancer treatments and focusing on those that target cancers resistant to chemotherapy. Like most other biotechnology stocks, its shares are sensitive to regulatory approvals and the market performance of its treatments. The stock has lost 55% since early March after ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) released its financial report for the fourth quarter of 2023. The release saw CEO Jacob Chacko share that his firm had several key milestones for its products planned in 2025, which meant that investors saw little potential in the stock for 2024. At the same time, while ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) is expected to move forward with its cancer treatments in 2025, the firm struggled with inflation in 2023. Its research and development expenses grew by 38% during the period.
However, 2024 isn’t a complete empty calendar for ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC). The firm successfully increased the dosage in a clinical trial of its lung cancer and tumor drug in April 2024. However, the shares didn’t respond favorably. ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) plans to conduct a dose escalation of another drug later this year, and provide an update for its prostate cancer treatment later during the year as well. The first quarter also saw the firm’s research and development expenses increase by 12% annually to sit at $22 million. Citi trimmed the share price target to $14 from $15 in May 2024 but kept a Buy rating on the stock. The bank’s slight shift came after ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC)’s first quarter report which saw the phase 1b trial for the firm’s ORIC-533 treatment miss its previous target of a dose escalation in the first quarter.
6. Sigma Lithium Corporation (NASDAQ:SGML)
Short Interest Percentage: 25.53%
Average Share Price Target: $37.36
Share Price Upside: 204.98%
Sigma Lithium Corporation (NASDAQ:SGML) is a Canadian lithium mining company with operations in Brazil. It is a loss making stock that reported its first revenue in several years in 2023 by bringing in C$181 million in sales. This naturally raises the stakes for Sigma Lithium Corporation (NASDAQ:SGML), as short sellers are eager to pounce on any weakness in the stock in case its revenue growth slows down. While initially analysts had expected the firm to breakeven and post a profit of C$82 million in 2025, which left plenty of room for a share price drop this year in case of slowing growth, May 2024 came with a significant downward revision for the year’s revenue but a new profitability estimate. This saw analysts cut their 2024 revenue guidance to C$354 million from $605 million, but also C$0.61 in earnings per share. While it marked a downward revision for the revenue, the earlier EPS estimate was C$0.42.
Sigma Lithium Corporation (NASDAQ:SGML) has also had a troubled history with management shakeups spooking investors. Its fate is tied to lithium production, and its shares soared by 11% in the first week of April after it shared plans of a $100 million investment in Brazil to increase output to 520,000 metric tons in 2025 from an earlier estimate of 270,000. Another key factor for the stock is the firm’s ability to manage lithium pricing. Its CEO commented on this trend during the latest earnings call where she shared:
We are extremely enthusiastic about our prospects as we have been advancing towards key catalysts of our plan to double production capacity by 2025. The four key deliveries of this quarter were fast, the delivery of an increased premium pricing where we achieved a fixed floating formula of 9% of the London Metals Exchange Lithium equivalent, basically reaching a $1,290 pricing. That represents an 11% increase to the April 24, realized pricing up the numbers we released for the first quarter of 2024. So that clearly demonstrates that the pricing trend is upwards.
An 11% increase from previous months and an overall almost 30% increase from the average pricing of the previous quarter.
5. Scholar Rock Holding Corporation (NASDAQ:SRRK)
Short Interest Percentage: 21.90%
Average Share Price Target: $27.43
Share Price Upside: 223.05%
Scholar Rock Holding Corporation (NASDAQ:SRRK) is a biotechnology firm developing treatments for anemia, muscular atrophy, and cancer. The firm is currently in the early stages of its development pipeline, which means that it is a loss making entity that does not earn either revenue or a profit. Naturally, this means that the prospects for Scholar Rock Holding Corporation (NASDAQ:SRRK) to soar on the stock market are rather low despite the fact that the firm sought to cash in on the weight loss drug trend at its investor day in May 2024. This saw Scholar Rock Holding Corporation (NASDAQ:SRRK) announce a proof of concept trial of a myostatin inhibitor for patients currently being treated with GLP-1 inhibitors. Myostatin inhibitors encourage muscle growth, but the announcement failed to inject any life into Scholar Rock Holding Corporation (NASDAQ:SRRK)’s shares that are down 51% year to date.
Scholar Rock Holding Corporation (NASDAQ:SRRK) is currently counting on the phase 3 trial of its muscular atrophy treatment called Apitegromab. Phase 3 SAPPHIRE trials are scheduled for the fourth quarter, and the firm hopes to commercially launch the product next year pending approval. Should a commercial launch be successful, it will allow Scholar Rock Holding Corporation (NASDAQ:SRRK) to earn revenue but that might not be enough to impress investors.
4. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA)
Short Interest Percentage: 22.34%
Average Share Price Target: $25.92
Share Price Upside: 224%
Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is a biotechnology firm that focuses on making cancer treatments. Like other biotechnology firms, its fate depends on the commercial success of its treatments. On this front, the shares soared by 72% in February 2024, after the FDA approved Iovance Biotherapeutics, Inc. (NASDAQ:IOVA)’s treatment for skin cancer. This treatment, called Amtagvi, was at the center of even better news in May 2024 when Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) announced that 15 out of 23 patients in a trial responded favorably to the drug. This was big news since Amtagvi is designed to be used in patients that have already used Merck’s Keytruda for their disease. For Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) , this means that a partnership with Merck might be on the horizon to allow it to expand its market size.
Fund Artisan Partners is also aware of these trends as it mentioned in its Q1 2024 investor letter and shared:
Iovance Biotherapeutics is a biotechnology company focused on innovating, developing and delivering novel polyclonal tumor infiltrating lymphocyte (TIL) cell therapies for cancer patients. Immuno-oncology remains a key area of drug development, and Iovance is the leader in TIL development and manufacturing, having secured the technology through collaborations with the leading academic institutions in TIL reseach. Shares rallied significantly after the company announced that the FDA approved AMTAGVI™ (lifileucel) for advanced melanoma. We added to the position.
3. OPKO Health, Inc. (NASDAQ:OPK)
Short Interest Percentage: 26.47%
Average Share Price Target: $4.25
Share Price Upside: 237.30%
OPKO Health, Inc. (NASDAQ:OPK) is a diversified healthcare company that sells laboratory equipment, medicines, and raw materials for the biotechnology industry. A loss making firm, its revenue dropped by 14% annually in 2023 to sit at $863 million. The shares opened in 2023 by dropping by 43%, as investors were no doubt spooked by a convertible note offering that dilutes shareholder value. OPKO Health, Inc. (NASDAQ:OPK)’s revenue shrank by $774 million in 2022 over 2021 as well. However, all might not be lost for OPKO Health, Inc. (NASDAQ:OPK) as the stock gained 55% in the final weeks of March and start April after the firm made a slew of announcements. These included a positive concept trial in rats for a GLP-2 pill for treating short bowel syndrome. This market currently only has one competing treatment offered by the Japanese firm Takeda Pharmaceuticals, and OPKO Health, Inc. (NASDAQ:OPK)’s partnership can lead to the first of a kind treatment through a pill.
OPKO Health, Inc. (NASDAQ:OPK) is also currently working with Pfizer to sell a hormone treatment globally which could lead to higher revenue. In its latest earnings call, management commented on the deal and shared details for milestone payments:
Moving to our pharmaceutical segment, as you’ve heard, NGENLA has been launched in all major global markets, like Pfizer.
We believe this drug is well positioned for significant growth as long-acting growth hormone products become the global standard in treating growth hormone deficiency for children. The launch is progressing as expected with an increasing and significant percentage of patients shifting from daily to the long-acting once a week NGENLA product. In addition, we expect our partnership with Pfizer to expand with additional indications including growth hormone deficiency for adults and other pediatric applications. And combined, these approvals for these two indications will entitle OPKO to an additional $100 million in milestone payments.
2. Cabaletta Bio, Inc. (NASDAQ:CABA)
Short Interest Percentage: 22.71%
Average Share Price Target: $33.56
Share Price Upside: 301.92%
Cabaletta Bio, Inc. (NASDAQ:CABA) is a Pennsylvania based firm developing treatments for immune system diseases. Its primary drug that could end up generating millions in revenue is the CABA-201 drug. This is a T-cell drug that is capable of treating more than one autoimmune disease, such as Myositis. On this front, CABA-201 has had a busy 2024. The drug has received FDA fast track designations for sclerosis and dermatomyositis, an orphan drug designation for sclerosis and myositis, and positive clinical trial data for ‘resetting’ a patient’s immune system. CABA-201 is quite important for Cabaletta Bio, Inc. (NASDAQ:CABA), since the company is a loss making entity that needs drugs to get to the market and generate revenue.
After Cabaletta Bio, Inc. (NASDAQ:CABA) presented the latest set of data for CABA-201’s clinical trial, Citi reaffirmed a $30 share price target and a Buy rating for the shares in May 2024. It shared that the drug’s progress was consistent with performance expectations, and CABA-201 benefits from a robust safety profile. Fred Alger Management mentioned the firm in its Q4 2023 investor letter, citing similar optimism:
“Cabaletta Bio, Inc. (NASDAQ:CABA) is a clinical-stage biotechnology company focused on the discovery and development of targeted cell therapies for autoimmune diseases. The company’s leading candidate, CABA-201, usd a cell therapy approach for the treatment of lupus and myositis, where the U.S. Food and Drug Administration has accepted CABA-201 for New Drug Applications, setting the stage for initial phase 1/2 readouts in the first half of 2024. We believe CABA-201 represents a multibillion-dollar opportunity for the treatment of autoimmune diseases. During the quarter, shares contributed to performance where biotechnology stocks rallied on lower interest rates and several acquisitions, Additionally, the company has reported positive clinical developments throughout the year which encouraged investors to anticipate an effective regulatory pathway to approval in our view.”
1. Verve Therapeutics, Inc. (NASDAQ:VERV)
Short Interest Percentage: 29.26%
Average Share Price Target: $27.13
Share Price Upside: 431.96%
Verve Therapeutics, Inc. (NASDAQ:VERV) is a biotechnology company developing treatments for heart diseases. The firm’s thesis revolves around its VERVE-101 drug that turns off a gene in the liver to reduce cholesterol. Its shares jumped by 21% in February when the firm shared that the drug was being evaluated in a Phase 1b trial. Its shares had tanked by 30% last year after the drug presented safety concerns, and this was also the case in April 2024. In April, Verve Therapeutics, Inc. (NASDAQ:VERV)’s stock tanked by 35% when it paused early stage enrollment for the trial after a patient exhibited severe adverse effects which included low platelets. Since then, the shares have been lackluster, and enrollment in the trials remains paused.
Verve Therapeutics, Inc. (NASDAQ:VERV) has focused its attention on the VERVE-102 treatment since then. This also led Jefferies to cut the share price target to $28 from $31 from May 2024 and keep a Buy rating on the shares. Data from VERVE-102 should be available next year, and consequently, any potential deals with Verve Therapeutics, Inc. (NASDAQ:VERV)’s mega pharma partner Eli Lilly is stretched out in the future.
While VEEV has a high analyst share price target upside, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VEEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None.
