Healthcare Highlights: Express Scripts Holding Company Dives, Intuitive Surgical, Inc. Surges

Pharmacy benefits manager Express Scripts Holding Company (NASDAQ:ESRX) is falling fast, while surgical equipment producer Intuitive Surgical, Inc. (NASDAQ:ISRG) is flirting with new highs

Jan 13, 2016 at 11:38 AM
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Two healthcare stocks are moving in drastically different directions today. Specifically, pharmacy benefits manager Express Scripts Holding Company (NASDAQ:ESRX) is falling fast, while surgical equipment producer Intuitive Surgical, Inc. (NASDAQ:ISRG) is on the rise. Let's take a closer look at ESRX and ISRG to see what's moving the shares. 

ESRX has dropped 6.5% today at $79.99, after its business partner, Anthem Inc (NYSE:ANTM), said it's working toward a contract renegotiation that could save it $3 billion a year, and threatened legal action if an agreement can't be reached. After fluctuating around $86 for well over a month, ESRX shares are now set for their lowest close since late September. Year-over-year, the stock has dropped 5.1%. 

This drop should be welcomed in the option pits, though. The healthcare stock's 50-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 2.31, which is higher than all other readings from the past year. This means there's been an intense interest in put buying in recent months. And today's drop has seemingly emboldened put players, with volume currently running at nine times the typical intraday pace.

Analysts are more uncertain about their feelings toward Express Scripts Holding Company (NASDAQ:ESRX). While nine brokerage firms call the stock a "hold," the nine other covering analysts say it's a "buy" or better. On a related note, the stock's average 12-month price target stands at $97.56 -- never-before-seen territory. 

On the other hand, ISRG hit a two-year high of $572.01 earlier, and was last seen 4.3% higher at $565.52. The company's preliminary reading on fourth-quarter revenue was better than anticipated, thanks largely to sales of the firm's da Vinci Surgical System. The stock has now surged 26.5% since its October bottom of $447. 

This pop may be stinging ISRG's option traders. At the ISE, CBOE, and PHLX, the stock sports a 10-day put/call volume ratio of 1.89, which is only 8 percentage points from an annual high. That said, these recent put buyers could actually be shareholders hedging against an unexpected loss.

Whatever the case may be, it appears the stock's gains have forced a change of behavior. Today's call volume stands at eight times the midday average, and nearly quadruples the number of puts on the tape. 

Elsewhere on Wall Street, the majority of analysts have high hopes for Intuitive Surgical, Inc. (NASDAQ:ISRG). Of the 15 brokerage firms tracking the healthcare stock, 10 say it's at least a "buy," while none recommend selling it. Plus, ISRG's consensus 12-month price target is $600.56. This marks all-time-high territory for the shares.

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