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Strength Seen in Oak Street Health, Inc. (OSH): Can Its 29.7% Jump Turn into More Strength?

Oak Street Health, Inc. OSH shares rallied 29.7% in the last trading session to close at $33.68. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 15% gain over the past four weeks.

Oak Street Health recorded a strong price increase after news surfaced that CVS Health Corp. is close to an agreement to acquire the company for about $10.5 billion including debt. Per an article by WSJ, this deal is expected to rapidly expand CVS Health’s footprint of primary-care doctors with a large network of senior-focused clinics. The deal, if it goes through, could be announced this week, according to sources with knowledge of the matter.

This company is expected to post quarterly loss of $0.62 per share in its upcoming report, which represents no change from the year-ago quarter. Revenues are expected to be $571.36 million, up 45% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Oak Street Health, Inc., the consensus EPS estimate for the quarter has been revised 6.9% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on OSH going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Oak Street Health, Inc. belongs to the Zacks Medical - Outpatient and Home Healthcare industry. Another stock from the same industry, DaVita HealthCare DVA, closed the last trading session 0.9% higher at $84.73. Over the past month, DVA has returned 6.7%.

For DaVita HealthCare , the consensus EPS estimate for the upcoming report has changed -3.6% over the past month to $0.88. This represents a change of -56.4% from what the company reported a year ago. DaVita HealthCare currently has a Zacks Rank of #3 (Hold).

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