Low current-quarter and yearly forecasts are hurting CVS, despite an earnings beat
The shares of CVS Health Corp (NYSE:CVS) are down 3.2% at $71.89 at last check, despite the company's better-than-expected fourth-quarter earnings report. Boosting the equity were Covid-19 testing and vaccines, the latter of which the retail pharmacy said it administered three million doses. However, the pandemic also hurt sales of cough and cold drugs as fewer customer hit the aisles, and the concern revealed low current-quarter and yearly forecasts. Meanwhile, CEO Larry J. Merlo said CVS Health will enter the individual public exchange markets.
On the charts, CVS' 50-day moving average -- which has served as support since early November -- swooped in to cradle the stock's latest pullback. The security then started to climb, but is once again meeting that trendline after today's drop. Year-to-date, the equity is up 5.3%.
The majority of analysts are bullish on CVS Health stock, with 11 of the 14 in coverage sporting a "buy" or better rating, and the remaining three carrying a tepid "hold." Plus, the 12-month consensus price target of $85.22 is an 18.7% premium to current levels.
Sentiment is similar in the options pits. The security's 50-day call/put volume ratio of 6.72 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 96% of all other readings in its annual range, showing long calls are being picked up at a faster-than-usual pace in the past 10 weeks.
Fixating on today's options activity, the intraday average is at four times what's typically seen at this point. More specifically, 58,000 calls and 16,000 puts have crossed the tape so far. The February 75 call is the most popular, followed by the March 80 call, with the former expiring at the end of this week.
These premiums are reasonably priced at the moment, too, per the stock's Schaeffer's Volatility Index (SVI) of 34%, which sits in the 14th percentile of readings from the past year. This implies that options players are currently pricing in relatively low volatility expectations.