Low Expectations Could Fuel More Upside for Medtronic Stock

Medtronic shares are outperforming on the charts, even with analysts saying 'hold'

May 31, 2017 at 10:32 AM
facebook twitter linkedin


Shares of Medtronic PLC (NYSE: MDT) hit a 2017 high after the medical device maker reported better-than-expected earnings and raised its full-year forecast last week. MDT stock is now boasting a more than 19% year-to-date lead. Despite these sound technical and fundamental backdrops, expectations remain low -- which could translate into buying power once the skepticism begins to unwind.

170526mdt

For starters, almost half of the 20 covering analysts maintain a tepid "hold" recommendation. This leaves the door wide open for a round of upgrades, which could help draw more buyers to MDT's table.

Elsewhere, the stock's top-heavy 50-day put/call volume ratio of 1.09 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks 2 percentage points from a 52-week peak -- meaning puts have been bought to open relative to calls at a near-annual-high clip. A capitulation from some of the weaker bearish hands could help boost the stock.

Plus, MDT's Schaeffer's Volatility Index (SVI) of 13% ranks below 92% of all comparable readings taken in the past year, meaning low volatility expectations are being priced into short-term options -- a potential boon to premium buyers.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this MDT commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Make the Most of the next Expiration Week Countdown!


 




 
Special Offers from Schaeffer's Trading Partners