What Happened?
Shares of alternate site health provider Option Care Health (NASDAQ: OPCH) fell 5.8% in the morning session after its third-quarter earnings was overshadowed by a full-year outlook that failed to impress investors.
The company reported adjusted earnings of $0.45 per share on $1.44 billion in revenue, topping Wall Street's estimates. However, the market appeared to focus on the company's full-year guidance. While management slightly raised its forecast, the new midpoint of $1.70 for adjusted earnings per share was just below the analyst consensus of $1.71. Additionally, the company's free cash flow margin of 9.1% represented a notable decrease from 11.8% in the same quarter last year. The market's negative reaction suggested that investors were hoping for a stronger outlook, and the mixed results, including the weaker cash flow, were not enough to sustain a positive trend.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Option Care Health? Access our full analysis report here.
What Is The Market Telling Us
Option Care Health’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 3.2% on the news that Morgan Stanley initiated coverage on the stock with an 'Overweight' rating and a $35 price target. The new rating from analyst Erin Wright signaled a bullish view on the company's future performance. The price target represented a notable premium to where the shares previously traded. The positive outlook was reportedly based on Option Care Health's leading position in the market for home and alternative-site infusion services. This sector was viewed as expanding due to the rising prevalence of chronic diseases and a general shift in healthcare toward lower-cost settings.
Option Care Health is up 14% since the beginning of the year, but at $25.88 per share, it is still trading 26.5% below its 52-week high of $35.20 from March 2025. Investors who bought $1,000 worth of Option Care Health’s shares 5 years ago would now be looking at an investment worth $1,941.
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