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One earnings short-squeeze candidate in the healthcare facilities sector is
Express Scripts(ESRX - Get Report), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Express Scripts to report revenues of $11.60 billion on earnings of 85 cents per share.
This company has seen its net income trend higher for three straight quarters. During the most recent quarter, net income trended higher by 7.7% from the year-ago same quarter. Express Scripts has seen its revenue trend higher for two straight quarters. The stock is trading about eight points off its
52-week high of $60.89 as we approach their earnings report this week.
The current short interest as a percentage of the float for Express Scripts is very high at 20.2%. That means that out of the 482.82 million shares in the tradable float, 90.58 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.2%, or by about 4.47 million shares. If the bears are caught leaning too hard into the quarter, then this stock could skyrocket since the short interest is so high.
From a technical perspective, ESRX is currently trading above its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong since it printed a recent low last October at $34.47 a share. During that uptrend, shares of ESRX have been making mostly higher lows and higher highs, which is bullish price action. Now the stock
sets up to break out post-earnings if the bulls get what they want.
If you're bullish on ESRX, I would wait until after it report earningss and look for long-biased trades if the stock breaks out above some near-term overhead resistance at $53 a share with heavy volume. Look for volume that's tracking in close to or above its three-month average volume of 6.7 million shares. If we get that action, then look for ESRX to make a run at $57.47 to $60.89 a share.
I would avoid ESRX or look for short biased trades if the stock fails to break out over $53, and then drops below $51 a share with volume. Target a drop back toward its 200-day moving average of $48.70 a share, or possibly much lower if the bears beat this stock down post-earnings on heavy volume.
Express Scripts, one of
8 UBS Stock Picks for 2012, shows up on a recent list of
Health Care Stocks Bought and Sold by Hedge Funds. In the fourth quarter,
George Soros increased his position in the stock by 240%.