Activist Investor Elliott Management has a large stake in Cardinal Health
The shares of Cardinal Health Inc (NYSE:CAH) have been on quite a tear lately, up 26.7% in the last month, with only two negative days since July 19. Yesterday, the stock hit a fresh three-year high after the Wall Street Journal reported activist investor Elliott Management has a large stake in the drug distributor. Today, CAH appears to be correcting itself a bit, as it inches 0.4% lower despite two price-target hikes, now trading at $69.70.
More specifically, Deutsche Bank raised its price objective to $72 from $51, while Cowen upped its own to $72 from $59. There is ample room for a further increase in analyst optimism, too, as 12 of the 16 in coverage carry a "hold" or worse rating on CAH. Plus, the 12-month consensus price target of $67.77 is a 3.1% discount to last night's close.
The options pits have been pessimistic as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 50-day put/call volume ratio of 1.66, which sits higher than 99% of readings from the past 12 months, meaning long puts are getting picked up at a much quicker-than-usual clip.
It's worth noting, however, that CAH is overdue for a short-term drop. The stock's 14-day Relative Strength Index (RSI) of 95.9 sits firmly in "overbought" territory.