What Happened?
A number of stocks jumped in the afternoon session after reports revealed the Trump administration considered extending the Affordable Care Act (ACA) subsidies. These subsidies, which are government financial aids to help people pay for health insurance, are crucial for insurers as they maintain a stable customer base. An extension would ensure continued revenue for companies with significant exposure to the ACA marketplace. The news prompted a strong positive reaction from investors, with Centene (CNC) shares jumping as much as 8%, Molina Healthcare (MOH) rising over 3%, and Oscar Health (OSCR) soaring 18%. The potential for a two-year extension reduces regulatory uncertainty for the sector, which investors view as a significant positive for the industry's outlook.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Senior Health, Home Health & Hospice company BrightSpring Health Services (NASDAQ:BTSG) jumped 2.5%. Is now the time to buy BrightSpring Health Services? Access our full analysis report here, it’s free for active Edge members.
- Genomics & Sequencing company 10x Genomics (NASDAQ:TXG) jumped 8.2%. Is now the time to buy 10x Genomics? Access our full analysis report here, it’s free for active Edge members.
- Medical Devices & Supplies - Imaging, Diagnostics company QuidelOrtho (NASDAQ:QDEL) jumped 7.7%. Is now the time to buy QuidelOrtho? Access our full analysis report here, it’s free for active Edge members.
- Drug Development Inputs & Services company Medpace (NASDAQ:MEDP) jumped 4.3%. Is now the time to buy Medpace? Access our full analysis report here, it’s free for active Edge members.
- Drug Development Inputs & Services company Fortrea (NASDAQ:FTRE) jumped 8.4%. Is now the time to buy Fortrea? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Fortrea (FTRE)
Fortrea’s shares are extremely volatile and have had 70 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 9.1% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
Fortrea is down 35.9% since the beginning of the year, and at $11.96 per share, it is trading 49.6% below its 52-week high of $23.73 from December 2024. Investors who bought $1,000 worth of Fortrea’s shares at the IPO in June 2023 would now be looking at an investment worth $397.34.
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