Analyst Targets 36% Upside for CVS Health Stock

Traders have been actively shorting CVS stock this year

Dec 11, 2018 at 10:02 AM
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Leerink initiated coverage on CVS Health Corp (NYSE:CVS) with an "outperform" rating and $100 price target -- a 36.4% premium to last night's close. The brokerage firm called concerns over the company's in-house pharmacy benefits manager (PBM) exaggerated, and waxed optimistic over CVS' cost savings forecast following its Aetna buyout.

In reaction, CVS stock has shot up 2.5% to trade at $75.15, bouncing off its year-to-date breakeven mark and rising 120-day moving average. This trendline served as a ceiling back in April, but more recently caught a late-October pullback alongside the stock's 200-day moving average. Longer term, CVS Health has gained 25% since its late-March lows near $60, though its Jan. 29 annual high of $83.87 has contained recent breakout attempts.

Most analysts remain bullish toward CVS, with 11 of 15 maintaining a "buy" or better rating at last night's close, and not a single "sell" on the books. Plus, the average 12-month price target sits all the way up at $93.

Elsewhere on Wall Street, skepticism has been growing toward the equity. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CVS' 10-day put/call volume ratio of 0.80 ranks in the 94th annual percentile. While this shows that calls have outpaced puts on an absolute basis, the rate of put buying has been faster than usual.

Meanwhile, short interest is up almost 82% year-to-date to 59.83 million shares -- the most since late 2007. These bearish bets account for nearly 6% of CVS Health stock's available float, or 7.7 times the average daily pace of trading.


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