2015-04-10 Call Buyers Look For New Highs In Omnicare Soon (OCR)

Posted on April 10th, by Mitchell Warren in Free Articles, Options Risk Management, Trade Ideas. Comments Off on 2015-04-10 Call Buyers Look For New Highs In Omnicare Soon (OCR)

Call Buyers Look For New Highs In Omnicare Soon (OCR)


Notes: On February 25th, Omnicare reported Q4 EPS of $0.96 (beat estimates by a penny) on revenue of $1.63B vs the $1.61B Wall Street estimate (6% year over year increase). The Specialty Care Group segment is driving the growth as sales jumped 21% to $443M in the fourth quarter (third straight quarter of high double digit growth). Shares of the $7.6B healthcare services company trade at a P/E ratio of 18.85x (2015 estimates), price to sales ratio of 1.17x, and a price to book ratio of 2.94x. Earnings are projected to grow in the low double digit range and sales in the mid-single digit range annually this year and in 2016. Following the latest quarterly report (Q1 earnings out on April 29th), Cowen raised their price target to $84 from $76 on February 26th and RBC Capital upped their target to $82 from $76 on March 13th.

Omnicare (OCR) Options Trade Idea

Buy the (OCR) May $80/$85 bull call spread for a $1.50 debit or better

(Buy the May $80 call and sell the May $85 call, all in one trade)

Stop loss- None

1st upside target- $3.00

2nd upside target- $4.50

Additional notes: This becomes a higher probability trade if you wait for the technical confirmation (see the chart above), but fundamental story and recent bullish options activity are reason to consider getting long Omnicare.

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