U.S. equities are oscillating around the unchanged line on Monday as the start of the Q3 earnings season and dimming hopes of tax reform weigh on sentiment.
But that’s nothing compared to the pressure hitting a handful of healthcare stocks, largely the result of reports on Friday that Amazon.com, Inc. (NASDAQ:AMZN) is thinking of moving into the prescription drug retailing business.
The downturn is coming just as the sector — represented by the Health Care SPDR (ETF) (NYSEARCA:XLV) — hits resistance from its mid-September high. Shares rallied roughly 7% from their mid-August lows, largely driven by a resurgence of interest in biotech stocks. But that too looks to be fading here.
Keep an eye on these five healthcare stocks for possible selling/short-side opportunities:
Healthcare Stocks to Sell: CVS Health (CVS)
The pain for CVS Health Corp (NYSE:CVS) started Friday on reports Amazon is looking at entering the pharmacy benefits/drug retail space over the next year or so, a market worth nearly $600 billion. CVS shares are now testing their early February lows, slicing below its 50-day and 200-day moving averages like they weren’t even there. Overall, shares have already lost 12% from their recent high.
CVS will next report results on Nov. 6, before the bell. Analysts are looking for earnings of $1.49 per share on revenues of $46.2 billion. When it last reported on Aug. 8, earnings of $1.33 per share beat estimates by 2 cents on a 4.5% rise in revenues.
Healthcare Stocks to Sell: Walgreens Boots Alliance (WBA)
Walgreens Boots Alliance Inc (NASDAQ:WBA) shares are getting pummeled back down to levels not seen since February 2016, threatening a fall all the way to levels not seen since late 2014 as it exits a long, three-year trading range. Shares were hit on the Amazon news as well as a downgrade from Morgan Stanley and lingering disappointment with a blocked merger with Rite Aid Corporation (NYSE:RAD).
WBA will next report results on Oct. 25, before the bell. Analysts are looking for earnings of $1.21 per share on revenues just below $30 billion. When it last reported on June 29, earnings of $1.33 beat estimates by 3 cents on a 2.1% rise in revenues.
Healthcare Stocks to Sell: Express Scripts (ESRX)
Shares of Express Scripts Holding Company (NASDAQ:ESRX) — a pharmacy benefits manager — have been pushed away from their 200-day moving average and dropped below their August lows, returning to levels not seen since May. This caps a near-40% decline from the highs set in the summer of 2015. Raymond James analysts piled on with a downgrade this morning; RBC Capital Markets analysts initiated coverage late last month, warning the company faced an uncertain future.
ESRX will next report results on Oct. 24, after the close. Analysts are looking for earnings of $1.90 per share on revenues of $25.7 billion. When it last reported on July 25, earnings of $1.73 beat estimates by 2 cents on a 0.5% rise in revenues.
Healthcare Stocks to Sell: DaVita (DVA)
Davita Inc (NYSE:DVA) shares are dropping hard on Monday, like someone pounded them over the head with a lead pipe. Thunk. The move ends a three-month consolidation range and it also violates the lows from last October. The drop returns shares to levels not seen since late 2013; JPMorgan analysts downgraded shares of the dialysis provider this morning.
DVA will next report results on Oct. 31, after the close. Analysts are looking for earnings of 96 cents per share on revenues of $3.9 billion. When the company last reported on Aug. 1, earnings of 92 cents beat estimates by 2 cents on a 4.3% rise in revenues.
Healthcare Stocks to Sell: Medtronic (MDT)
Medtronic plc. Ordinary Shares (NYSE:MDT) shares were hit by a downgrade from RBC Capital Markets on Monday, sending shares down to February levels. The cause? MDT outlined details of the damage to its manufacturing facilities in Puerto Rico from Hurricane Maria. This confirms a year-to-date, head-and-shoulders reversal pattern, that’s setting up a decline back to the late 2016 lows near $70, which would be worth a 10% decline from here.
MDT will next report results on Nov. 21, before the bell. Analysts are looking for earnings of $1.07 per share on revenues of $7.1 billion. When the company last reported on Aug. 22, earnings of $1.12 beat estimates by 4 cents on a 3.1% rise in revenues.