Healthcare Stock Deemed a 'Safe Haven' From Amazon Threat

DGX stock has received several bull notes from analysts this year

Josh Selway
Jul 10, 2018 at 9:28 AM
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Adding its name to the long list of firms that have upgraded Quest Diagnostics Inc (NYSE:DGX) this year, Evercore ISI this morning raised its rating on the healthcare stock to "overweight" from "in line," and set a $121 price target, which represents all-time-high territory. Not only does the analyst in coverage view DGX as a "safe haven" during Amazon's (AMZN) push into healthcare, but they also believe the diagnostics specialist is less exposed to political headwinds, as well.

This latest round of bullish buzz has DGX shares up 1.1% before the open. Back on June 25 they spiked to an all-time best of $116.49, and since have enjoyed strong support from the 30-day moving average.

However, short interest has started to rise since bottoming at a roughly six-year low in May. In just the past two reporting periods, the number of Quest Diagnostics shares held by short sellers increased by 10.9% to 4.6 million. Going by average daily volumes, it would take short sellers more than a week to cover their positions.

As for options traders, calls continue to be popular. For instance, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.47 shows call open interest nearly doubles put open interest among contracts expiring within three months. Either way, it's a good time to target premium for near-term DGX options, since its Schaeffer's Volatility Index (SVI) of 17% lands in just the 18th annual percentile -- hinting at unusually low volatility expectations.


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