CVS Health (NYSE:CVS) has once again caught our attention as a possible rebound play after reporting its earnings Feb 20th. Since then, the stock has been in free fall. Rumors of Medicare for All, and changes to pharmacy/drug reimbursements have fueled the fire. The company has lost 25% of its value in two weeks. It is over done. It is in our opinion disgusting. We are holding our noses and buying. Let us discuss.
Ok, so aside from the "what-ifs" of legislative changes, the company is strong. The earnings report was quite interesting relative to our expectations, for the second time within a year. This name had been stuck in neutral for months, essentially range bound. Remember last year the last opportunities stemmed from until news that it was interested in purchasing Aetna (AET) which sent the stock below $70, and then earnings would send it toward the $60 mark.
The $60 mark has been the level of interest for our firm for some time. We stated plainly in our BAD BEAT Investing service that under $60 was the level we loved. Here we are under $55 now. We feel very compelled to get behind the name here.
Trading action
We think CVS is a great long-term play, but now also offers a short-term trade opportunity once again. We have said this time and again but CVS has really grown to be more than a pharmacy. From a trading perspective $60 was reliable, buy, ride it up, sell, let it fall, buy...rinse and repeat. With shares breaking under $60 and now $55, they are ripe for a bounce:
Source: BAD BEAT Investing
The decline was big and shares surpassed the 3-day selloff expectation many of us had, but it gave us opportunity to take a shot. We think the action is opportunity. We
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