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Option Care (OPCH) Surges 6.3%: Is This an Indication of Further Gains?

Option Care OPCH shares soared 6.3% in the last trading session to close at $30.35. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 2.1% gain over the past four weeks.

Option Care recorded a strong price increase after it issued a statement where it reiterated its belief in the near- and long-term value creation opportunities of its previously-announced definitive merger agreement with Amedisys. Per Option Care’s management, Option Care and Amedisys as a combined company will be well-positioned to meet the growing demand for personalized care in the home and alternative sites. The announcement that the companies have entered into the definitive merger agreement was made on May 3.

This infusion and home care services company is expected to post quarterly earnings of $0.22 per share in its upcoming report, which represents a year-over-year change of +15.8%. Revenues are expected to be $1.06 billion, up 8.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Option Care, the consensus EPS estimate for the quarter has been revised 2.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on OPCH going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Option Care is part of the Zacks Medical - Outpatient and Home Healthcare industry. Quest Diagnostics DGX, another stock in the same industry, closed the last trading session 1% lower at $134.22. DGX has returned -0.7% in the past month.

Quest Diagnostics' consensus EPS estimate for the upcoming report has changed -0.8% over the past month to $2.26. Compared to the company's year-ago EPS, this represents a change of -4.2%. Quest Diagnostics currently boasts a Zacks Rank of #3 (Hold).

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