Analyst Update: Merck & Co, Quality Systems, Align Tech

Analysts adjusted their ratings and price targets on Merck & Co., Inc. (MRK), Quality Systems, Inc. (QSII), and Align Technology, Inc. (ALGN)

Jan 29, 2016 at 3:17 PM

Analysts are weighing in today on healthcare interests Merck & Co., Inc. (NYSE:MRK), Quality Systems, Inc. (NASDAQ:QSII), and Align Technology, Inc. (NASDAQ:ALGN). Here's a quick roundup of today's brokerage notes on MRK, QSII, and ALGN.

MRK is shrugging off a price-target cut to $60 from $66 from BMO, after the U.S. Food and Drug Administration (FDA) approved its newest treatment for hepatitis C -- much to the dismay of this biotech rival. (Meanwhile, this sector peer got its own FDA nod.) Merck & Co., Inc. has shed roughly 17% of its value year-over-year, but is trading 2.2% higher at $50.26 today. Heading into the company's earnings report -- due before the open next Wednesday -- analysts are evenly split on the stock, giving seven "strong buys" and seven "holds." But option traders may be eyeing a post-earnings move higher. MRK has a Schaeffer's put/call open interest ratio (SOIR) of 0.49 -- lower than 98% of all readings from the past year. In other words, among options expiring in the next three months, traders hold calls over puts at a rate rarely seen.

QSII plunged 20.5% to trade at $12.94 -- dangerously close to its 10-year low of $12.00, seen in August -- after reporting fiscal third-quarter revenue short of expectations. Quality Systems, Inc. received four price-target cuts -- three of which were to $15 -- while Jefferies actually raised its price target to $15 from $12. Analysts in general have been bearish on the security, however, with 12 out of 16 assigning it a rating of "hold" or worse.
After reporting stronger-than-expected earnings and offering upbeat full-year guidance, ALGN is 10.4% higher at $65.72, having touched a new record high of $69.36 earlier. No fewer than five brokerage firms raised their price targets on Align Technology, Inc. today, the most ambitious of which came from Stifel, at $82. Quite a few shorts may be hitting the bricks after today's rally. Short interest on ALGN represents nearly eight sessions' worth of pent-up buying demand, at the stock's average pace of trading -- ample fuel for a short squeeze.

For other stocks in analysts' crosshairs, read Analyst Upgrades: Microsoft Corporation, J C Penney Company Inc, and Flextronics International Ltd. and Analyst Downgrades: Amazon.com, Inc., Alibaba Group Holding Ltd, and Electronic Arts Inc.

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