2 Stocks Struggling Amid Opioid Settlement Buzz

MCK and CAH stocks are in hot water today

by Lillian Currens

Published on Aug 6, 2019 at 2:57 PM
Updated on Aug 6, 2019 at 4:00 PM

Stocks are mostly higher this afternoon, following yesterday's nosedive, encouraged by China's plans to stabilize the yuan. Three stocks also making wild moves are pharma stocks McKesson Corporation (NYSE:MCK) and Cardinal Health Inc (NYSE:CAH), as well as marijuana concern Aurora Cannabis Inc (NYSE:ACB).  Below, we'll look at what's sparking major moves for MCK, CAH, and ACB stocks.

McKesson Stock Pacing for Worst Day in a Year

MCK is eyeing its worst day since 2017, after Bloomberg said the firm -- along with fellow opioid providers Cardinal Health and AmerisourceBergen -- proposed a $10 billion settlement regarding the companies' roles in the opioid epidemic. A $45 billion counter demand was then made by the National Association of Attorneys General, according to reports. 

McKesson stock is down 6.1% to trade at $135.83, and hit a one-month low of $134.12 earlier. Not only that, MCK is pacing for its worst day since June 2018, and its first close below the 40-day moving average since late April. This trendline has acted as support on the charts of late, helping the equity hit a one-year high just below the $150 region last week. 

Cardinal Health Stock Keeps Sliding 

CAH's losses are similarly severe in the wake of the Bloomberg buzz. The stock is down 6.4% at $42.65 -- trading dangerously close to its five-year low of $42.01, touched on June 3. It's been a rocky year on the charts for Cardinal Health, with the equity extending its string of lower highs and lows in place since the 2015 peak.

Cardinal Health stock could see another massive move later this week, when the company steps into the earnings confessional before the open on Thursday, Aug. 8. And while the last eight post-earnings reactions are evenly split between positive and negative one-day returns, the stock moved higher after the last three reports. CAH has averaged a one-day 5.8% swing, regardless of direction, during the last eight post-earnings sessions. This time around, the options market is pricing in a slightly bigger next-day move of 9.7%. 

ACB Stock Surges on Preliminary Guidance

Weed concern Aurora Cannabis is having better luck today, after lifting its preliminary fourth-quarter revenue guidance. The equity is up 9.4% to trade at $6.77, at last check.  As such, ACB shares are set to topple their 20-day moving average for the first time in a month.

This pop has sparked an influx of bullish activity in the options pits. So far, 76,000 call contracts have crossed the tape -- four times the average intraday pace -- compared to just 12,000 put contracts. The weekly 8/9 7-strike call is the most popular, with positions being bought to open here. This means that traders are expecting more upside for the security by the time these contracts expire at the end of this week. 

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