CVS Health Corporation (CVS)

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CVS Stock Propped Up by New Bullish Coverage
By: Schaeffer's Investment Research | September 17, 2020

• Piper Sandler initiated coverage with an "overweight" rating

• The company also plans to double its coronavirus testing sites

CVS Health Corporation (NYSE:CVS) is up 0.8% at $57.31 at last check, brushing off the broad-market weakness today thanks to Piper Sandler's initiated coverage -- an "overweight" rating and price target of $72. The firm noted that CVS is well-positioned to provide quality healthcare at reduced costs. Also, the company announced this morning plans to double its COVID-19 drive-thru tests to a total of over 4,000 nationally.

Despite today's gains, CVS stock is off 11.4% in the last month, facing recent pressure from its descending 10-day moving average. The round $66 level emerged as a stiff ceiling during the summer, so its a bit of a surprise twelve of the sixteen analysts in coverage sport a "buy" or better rating on CVS, with the remaining four at a "hold." Meanwhile, the 12-month consensus price-target of $79.64 is a 39.2% premium to current levels.

Echoing this, the options pits have been overwhelmingly focused on calls. CVS' 50-day call/put volume ratio of 5.29 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than all other readings from the past year. This means long calls are being picked up at their fastest rate in a year.

Options look like a decent way to go when weighing in on CVS stock as well, as it is currently seeing attractively priced premiums. The stock's Schaeffer's Volatility Index (SVI) of 27% sits higher than just 8% of readings in its annual range, suggesting short-term options are pricing in relatively low volatility expectations.

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