Can These 2 Healthcare Stocks Outperform in May?

Healthcare stocks Anthem Inc (NYSE:ANTM) and Express Scripts Holding Company (NASDAQ:ESRX) have historically performed well in May

Apr 29, 2016 at 2:02 PM
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Before he was complaining about the Buffalo Bills' first-round draft pick, my colleague Alex Eppstein wrote about some of the best stocks to consider in May. Taking the data a step further, I'm going to look at two healthcare stocks -- Anthem Inc (NYSE:ANTM) and Express Scripts Holding Company (NASDAQ:ESRX) ​ -- that have historically outperformed in May. Let's see how Wall Street's positioned on ANTM and ESRX. 

ANTM is down 2.2% at $140.83, testing support at its 200-day moving average and year-to-date breakeven, as the stock continues to move lower following Wednesday's earnings release. The stock has moved higher in eight of the past 10 Mays, with an average gain of 4.6%.

It seems analysts are preparing for another big month, as Jefferies and Wedbush both raised their price targets Wednesday night, to $171 and $159, respectively -- though this isn't anything new, since the majority of analysts call the stock at least a "buy," with no "sell" ratings to be found.

Elsewhere, however, pessimism runs deep on Anthem Inc (NYSE:ANTM). The stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at an elevated 3.28, putting it just 10 percentage points from an annual high. Plus, short sellers control almost six days' worth of buying power, going by the stock's average daily volume. If ANTM can rally from the aforementioned levels of technical support, there's a chance for an unwinding of pessimism to drive the stock higher. 

Meanwhile, ESRX is down 1.3% at $73.93 today, giving back this week's post-earnings gains. And while ESRX is still 7.3% higher for April, it sits in a 15.4% hole year-to-date, due to its mid-January collapse stemming from a contract dispute with ANTM. However, ESRX CEO George Paz earlier this week said the company hopes to keep Anthem as a customer.

Looking back, the shares have gained in eight of the past 10 Mays, sporting an average advance of 1.6%. If Express Scripts Holding Company (NASDAQ:ESRX) can muster another strong May, it could drive away some short sellers and thus help the shares on the charts. For instance, the 50.2 million ESRX shares sold short equal almost two weeks' worth of buying power, at ESRX's average pace of trading. 

 

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