CVS stock is fresh off a two-year low
CVS Health Corp (NYSE:CVS) stock is trading at $76.17 at last check, pacing for its fourth win in five sessions. CVS carries a hefty 18.2% year-to-date deficit, thanks to a long pullback that started in mid-February before culminating in a March 23, two-year low of $72.10. Despite a brief bounce from this floor, CVS could soon slip again, too, if past is precedent.
The stock's recent low comes amid historically low implied volatility (IV), which has been been a bearish combination before. Schaeffer's Quantitative Analyst Rocky White's data shows three similar signals in the last five years when CVS was trading within 2% of its 52-week low, while its Schaeffer's Volatility Index (SVI) ranked in the 20th percentile of its annual range or lower. This is currently the case with CVS Health stock's SVI of 20%, which ranks in the low 12th percentile of its annual range.
One month after these signals, the equity was lower 67% of the time to average a 4% dip. From its current perch, a move of comparable magnitude would push the shares back below $74.
Additional headwinds could come from a round of downgrades and/or price-target hikes, given 14 of the 18 firms in coverage calling CVS Health stock a "buy" or better. Plus, the 12-month consensus target price of $112.71 is a whopping 48% premium to its current perch.
At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CVS carries a 50-day call/put volume ratio of 3.87 that sits higher than all but 4% of readings from the past year, suggesting a preference for bullish bets. Should this optimism start to unwind, shares could move lower still.