UpdateFebruary 8, 2001
Today, Universal Health Services confirmed it would report fourth-quarter earnings on February 15th. The company is estimated to post EPS of $0.76 and could announce a stock split with its earnings release. On Thursday, the stock lost 2% for the day on volume of 348,000 shares. On a more positive note, the stock has risen 20% in the last month since bouncing off the 200-dma at $74.50 in mid January. Below its current position, we see support at the 5-dma at $86.00 and then at the 20-dma at $83.72. New play opportunities might include a bounce off support if volume were to exceed 200,000 by midday or if resistance at $90 were defeated on even greater volume. As a reminder, we will drop UHS by the close of trading on Wednesday according to our policy not to hold a position through earnings. We'll tighten our stop to $84.00 on this play to lock in profits.
Picked on February 1st at $81.99
Change since picked +5.32
Stop Loss at $84.00
February 6, 2001
United Health Services posted a 4 percent gain this week and signed a new multi-year agreement. UHS operates 47 hospitals, consisting of 21 acute care hospitals, 23 behavioral health centers, and two women's centers in the US and Puerto Rico. On Tuesday, the company announced that it has entered into a multi-year agreement with HealthGate Data Corporation to strengthen the brand identity of its local hospital Web sites, and provide real-time access to a comprehensive library of health content. This announcement and next week's earnings announcement could be the cause of the stock decent performance this week. UHS will report its fourth-quarter earnings results on February 16th. We have UHS targeted as a possible split candidate as well. The stock was last split back in 1996 at the $60.00 level, so a split could be forthcoming. UHS is approaching a significant resistance level, the 100-dma at $89.00. In order for this level to be penetrated, we'd look for a surge of volume over 250,000 by midday with support from the CBOE Health Care Index (HCX.X). Possible entry points would be a bounce off support at $85.00 or the 10-dma at $83.50. We will post our stop at $75.25 on this play.
Picked on February 1st at $81.99
Change since picked +4.01
Stop Loss at $75.25
February 4, 2001
United Health Services seems to be reaping the benefits of a New Year and a new Administration. UHS has appreciated 13% since mid-January and looks to be able to continue this trend. UHS owns and operates acute care hospitals, behavioral health centers, ambulatory surgery centers, radiation oncology centers and women's centers. UHS will soon be reporting their quarterly earnings and hopefully will post another strong quarter. The company has beaten its earnings expectations for the last four quarters, which might be why ING Baring recently upgraded the stock from a "hold" to a "buy" rating. Furthermore, the company does have enough authorized shares to split, should they choose to do so. Looking at the chart, we can see that UHS is working on coming off a double bottom formation. We also now note that UHS has support at the 10-dma at $81.50 and then at the 200-dma at $75.65. Resistance will pose a threat at the 20-dma at $84.02 and then at $85.00. Those considering opening a new position on UHS might look for a bounce off a support level on good volume (over 400,000) by 1:00 PM EST. The stock normally trades about 465,000 shares based on a 3-month average. Additionally look for leadership from the Dow Jones Industrial Average (INDU) as well as the CBOE Health Care Index (HCX.X) when considering new plays. We will post our protective stop at $75.25.
Picked on February 1st at $81.99
Change since picked +0.86
Stop Loss at $75.25
