Healthcare Name Ripe for Short-Term Surge

TDOC has been making a name for itself in the new era of social distancing

It comes with little surprise that telehealth provider, Teladoc Health (NYSE:TDOC), has been making a name for itself in 2020. A leader in the small group of healthcare companies providing services that allow patients to connect to their physician via computer, Teladoc has become a household name in the age of social distancing. In fact, back in late April the company shared a disappointing quarterly report, but was still met with no fewer than 11 price-target hikes by covering analysts. What's more, TDOC has surged 114% year-to-date, and is now being seen flirting with a historically bullish trendline.

According data from Schaeffer's Senior Quantitative Analyst Rocky white, TDOC has pulled back to within one standard deviation of its 40-day moving average. Within the past three years, eight of these signals have occurred, with the equity enjoying a 21-day average gain of 8.79%, with 71% of these returns positive. A similar move from the security's Thursday night close of $179.54 would put Teladoc stock just above $195, back on track to take out its April 27 record peak.

Despite the aforementioned slew of post-earnings price-target raises, analyst activity has been mostly bearish toward Teladoc Health stock. In fact, heading into Friday's trading, just over 50% of the 21 covering firms sport a tepid "hold" recommendation. Should these bearish bets begin to unwind, it could send another round of tailwinds to push the equity even higher.

Lastly, short interest has dropped off, down 17.1% during the past two reporting periods. However, this accounts for 12.1% of the stock's total available float. In simpler terms, it would take shorts almost three days to buy back their bearish positions, an ample amount of buying power that could hit the market and fuel a short-term surge.

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, May 17.