CVS Moves Higher on Million-Dollar Return

Analyst sentiment is bullish on the stock

Deputy Editor
May 20, 2020 at 10:34 AM
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The shares of CVS Health Corp (NYSE:CVS) are up 0.9% at $64.17 at last check, following news that the company is giving back $43.3 million it received from the CARES Act Provider Relief Fund. CVS chief executive Larry Merlo stated that the CVS did not ask for the funds, and in returning it "we hope to help HHS provide additional support to other providers who are facing significant financial challenges as a result of the pandemic."

Trading sideways on the charts as of late, CVS looks to have found a cushion at the $60 region, with overhead pressure at both the $64 mark and descending 100-day moving average. As a result, the security now sports a 13.7% year-to-date deficit. 

Analysts are leaning mostly bullish, with 12 out of 16 sporting a "buy" or better rating, while the remaining four sport a lukewarm "hold." Meanwhile, the 12-month consensus price target of $78.65 is a 23.6% premium to current levels. 

This bullish sentiment carries over into the options pits as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 3.20 calls have been bought for every put in the past 10 weeks. This ratio sits in the 96th percentile of its annual range, suggesting calls are being picked up at a faster-than-usual clip. 

Furthermore, now seems like a good time to speculate on CVS' next move with options. The stock's Schaeffer's Volatility Index (SVI) of 30% stands higher than just 12% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations.

 

 

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