Red-Hot Tenet Healthcare Stock Sends Shorts Scrambling

Meanwhile, Hasbro's Power Rangers purchase drags Mattel stock lower

Managing Editor
May 1, 2018 at 3:02 PM
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The Dow is moving lower today, down triple digits after a rough round of pharma earnings. Toymaker Mattel, Inc. (NASDAQ:MAT) and e-commerce specialist Shopify Inc (NYSE:SHOP) are struggling as well, while healthcare name Tenet Healthcare Corp (NYSE:THC) is bucking the broad market trend. Here's a closer look at how shares of MAT, SHOP, and THC are trading.

Hasbro's Power Rangers Purchase Hurts Mattel Stock

Mattel stock is down 6.4% to trade at $13.86, after Reuters reported sector peer Hasbro (HAS) is planning to acquire the rights to franchises like the Power Ranger from Saban Entertainment for $520 million in cash and stock. Still, UBS raised its price target on Mattel to $17 from $16. 

Mattel stock bottomed at a nine-year low of $12.21 on April 20, and has now shed nearly 10% in 2018. Rally attempts along the way have been decisively blocked by the shares' 80-day and 200-day moving averages.

Short sellers are hoping more downside is ahead, too. Nearly 18% of MAT's total available float is sold short, and it would take almost 16 days for shorts to cover their positions, at the security's average trading volume. 

Slowing Growth Rate Cripples Shopify Stock

Shopify stock is down 6.8% to trade at $124.53, on track for its worst session since Feb. 21. Even though the company posted a surprise first-quarter profit, gross merchandise volume (GMV) growth and the full-year outlook disappointed. Despite the drop today, Shopify shares have still added over 23% in 2018, with pullbacks being contained by their 160-day moving average. 

Analysts remain committed to the security. Of the 24 brokerages covering SHOP, 13 rate the shares a "buy" or "strong buy." Furthermore, the equity's average 12-month price target of $145.43 is a nearly 17% premium to its current perch.

Tenet Healthcare Stock Hits New High After Earnings

Tenet Healthcare stock is soaring-- up 21.4% to trade at $29.05 -- breaking out above recent congestion near $25 to hit a 21-month high of $29.51 earlier, and near the top of the New York Stock Exchange (NYSE). Driving today's rally is the company's impressive first-quarter results, where both earnings and revenue topped analysts' forecasts. THC stock is on track for its best day in nearly a year, and has now added an impressive 91% in 2018. 

A continued round of short covering could provide even more tailwinds for the surging equity. Short interest has been nearly cut in half since September, but the 18.57 million shares still sold short represents a whopping 24.6% of THC's total available float. It would take almost two weeks for shorts to buy back their positions, at the security's average daily trading volume.

Some of these remaining shorts may have been bracing for upside risk, considering long calls have been initiated relative to puts at a quicker-than-usual clip over the past two weeks. The stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 6.83 ranks in the elevated 85th annual percentile.


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