The Healthcare Stock Set to Soar on $4.9 Billion Buyout Buzz

DVA stock could take out several key technical levels today

Dec 6, 2017 at 9:18 AM
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After closing last night at $60.93, shares of DaVita Inc (NYSE:DVA) are up nearly 9% in pre-market trading. UnitedHealth Group Inc (NYSE:UNH) said it is purchasing the kidney dialysis company's DaVita Medical Group in a $4.9 billion all-cash deal, and the primary care unit will become part of UNH's Optum division. This follows Monday's major healthcare merger announcement between CVS Health (CVS) and Aetna (AET), and has DVA stock set to open at its highest point since August.

In fact, should today's projected price move play out, DVA shares could close their early August bear gap, and move back into positive year-to-date territory. The stock could also take on key resistance at the 200-day moving average, which contained Monday's pop. The equity has not closed above this trendline since July 28.

More broadly, the shares have been rallying hard off their nearly five-year low of $52.51, hit on Nov. 8. Should Davita stock continue this momentum, more short sellers might be encouraged to jump ship. Although short interest fell 8% in the most recent reporting period, there are still 7.24 million DVA shares sold short -- or 3.2 times the stock's average daily pace of trading.

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