2 Medical Technology Stocks Named Top Picks by J.P. Morgan Analyst

Interestingly, a number of bears have recently taken aim at BDX and ABT

Jun 21, 2018 at 9:25 AM
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An analyst at J.P. Morgan Securities just released a note waxing optimistic on the medical technology sector, citing a strong start to the year, earnings growth potential, and M&A opportunities. Two stocks mentioned specifically as top large-cap picks for the second half of the year were Becton Dickinson and Co (NYSE:BDX) and Abbott Laboratories (NYSE:ABT). As such, we'll take a closer look at shares of BDX and ABT below.

BDX Stock Could Burn Recent Short Sellers

In J.P. Morgan's note, BDX stock was upgraded to "overweight" from "neutral," and its price target was increased to $275 from $250 -- representing all-time-high territory for the shares. As of yesterday's close, the security was trading at $230.12, up 18% year-over-year and recently finding support from the 50-day moving average. But while the stock boasts a Schaeffer's Volatility Index (SVI) of 16% that ranks in just the 14th annual percentile -- hinting at attractive premiums for short-term options -- options volume has been tepid. In fact, there have been just 304 puts and calls bought to open over the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

It's also interesting to point out that short interest has been on the rise recently, jumping 21.3% in the last reporting period. Almost four days' worth of buying power is now dedicated to short interest, based on average daily volumes, so if BDX shares can indeed outperform in the months ahead, a short squeeze could add to the upside.

ABT Stock Aims For Fresh Highs

Abbott Laboratories stock has been even more impressive on the charts, rallying 27.4% in the past 12 months, while hitting a record high of $64.60 back in late January. The shares in recent weeks have been consolidating just below this level, last seen at $62.14. An unwinding of recent pessimism could help push ABT past that January milestone, however. For example, traders in recent weeks have opted to sell to open the front-month July 65 call, expecting the $65 mark to serve as a technical ceiling in the coming weeks.

 

 

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