The Healthcare Stock That Could Be Headed for Record Highs

Medical supplier Hologic, Inc. (NASDAQ:HOLX) popped up on our radar recently, as the stock has enjoyed a nice run higher over the past year, yet pessimism still plagues HOLX shares. Against this backdrop -- and considering HOLX stock's recent pullback -- now could be an opportune time for bulls (or perhaps options sellers) to strike.

Short Sellers Circle HOLX Stock

Short interest on Hologic stock has surged more than 110% so far this year, even as the shares have surged more than 12%, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. However, in the past couple of reporting periods, these bears have started to abandon their losing positions. Roughly 8 million HOLX shares remain dedicated to short interest, though, and a continued squeeze could propel the stock even higher.

Hologic Stock Could Be Flashing 'Buy' Before Earnings

On the charts, Hologic stock has skyrocketed more than 41% since its early 2016 lows, and was last seen trading just north of $45. Just over a month ago, HOLX touched a record high of $46.80, but has since taken a breather to come within one standard deviation of its 80-day moving average -- a historic "buy" signal for the shares, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. 

After the last eight pullbacks to this trendline, Hologic stock was higher one month out 75% of the time, averaging a return of 2.72%. A similar rally would place the shares around $46.25 -- within striking distance of the aforementioned record high. What's more, Hologic, Inc. is slated to report earnings in just over a week. Over the past eight quarters, HOLX shares have moved an average of 5.3% the day after earnings -- regardless of direction. A rally of that magnitude would place the stock well into uncharted territory.

HOLX Option Buyers Beware

As for potential Hologic options traders, however, it should be noted that the stock's near-term options are becoming pricey -- as expected ahead of earnings. The equity's Schaeffer's Volatility Index (SVI) of 31% is higher than more than half of all other readings from the past year, suggesting short-term contracts are expensive, relative to historical volatility. In addition, HOLX stock's Schaeffer's Volatility Scorecard (SVS) sits at a low 8, indicating the shares have underperformed options traders' volatility expectations over the past 12 months. As such, Hologic's near-term options may be more appealing for premium sellers  -- perhaps put sellers betting on support to hold -- as opposed to buyers right now.