Medical Supplier Falls Victim to Coronavirus Headwinds

Options traders and analysts were hopeful heading into today

Managing Editor
Feb 18, 2020 at 10:20 AM
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Medical equipment name Medtronic PLC (NYSE:MDT) is moving lower this morning, suffering on the heels of a disappointing third-quarter revenue in response to the heightened impact of the coronavirus. Outbreak-based headwinds is nothing new for stocks, as just this morning Apple (AAPL) sent the Dow spiraling on its own revenue warning. In response, MDT is down 4.1% at $112.51, at last check.

Longer term, MDT has been running up the charts, now 22% higher year-over-year. Aiding this surge has been the 50-day moving average, as well as two healthy post-earnings bull gaps last May and August. However, this trendline has been breached today for the first time since mid November.

Analysts have yet to chime in, but heading into today, overall sentiment looked optimistic. That is, 16 of 21 firm sport a "buy" or "strong buy" rating, just five carry a "hold," and not a single "sell" to be found. Plus, the stock's average 12-month price target of $126.43 comes in 11.4% above current trading levels.

Meanwhile in the options pits, calls have been a favorite. Specifically, the security's Schaeffer's open interest ratio (SOIR) comes in at 0.30, which ranks in the 7th percentile of its annual range. In other words, short-term options players have rarely been more call-heavy during the last 12 months. 

 

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