After months of toiling, shares of Privia Health Group (PRVA) made a bullish move Tuesday, when the stock jumped above a buy point in heavy trading. Privia is today's focus for IBD 50 Stocks to Watch.
XThe health care stock rose past the 29.07 buy point in midday trading Tuesday. The buy range goes 30.52. The breakout lifted shares to the highest level since November, as they cleared a nine-week cup base that formed within a much longer consolidation.
Despite the bullish action, keep in mind the stock market remains in a correction. Breakouts have a tendency to flop when market conditions are weak.
Privia Health stock has been rangebound since November, the third act in a trading history that can be described in three phases.
The first was the IPO phase. Privia Health went public on April 29, 2021, at 23 a share and met with immediate success. Shares of the health care software provider shot up as high as 39.58 in the first couple of weeks of trading. The stock formed an IPO base and broke out past its first buy point — at 39.68 — a little more than a year ago.
Health Care Stock's IPO Was A Success
Privia climbed as much as 28% from the IPO base, which made it an unquestioned success. IBD's trading rules call for taking at least some profits when your gain is 20% to 25%. That would have been a smart strategy, because from the June 29, 2021 peak, Privia started its second act.
This part went badly. The health care stock plummeted over the next three months, trading below the 23 IPO price for a while. Revenue growth slowed in Q1-Q3 of 2021. An October-November rebound ran up against a peaking stock market.
Privia has traded mainly between 19 and 29 the past nine months. But during this third phase of its history, the stock was able to form a base with signs of institutional demand. A bullish reversal the second week of July marked the low of the base, and price closes have been high in each week's price range since then. That was positive action.
Privia Health Group provides support services for medical groups in eight states, including Tennessee, Georgia and Florida, plus Washington, D.C. Since last year, the company has been launching so-called accountable care organizations, which now include more than 1,900 independent providers serving more than 168,000 Medicare beneficiaries.
Health Care Company Expands
The company expanded with new operations in California and West Texas in the fourth quarter of 2021, and Montana in the first quarter, which helped accelerate revenue growth.
The number of providers in its system rose 27% in the first quarter vs. the year-ago period, according to a company presentation to investors.
Analysts expect the company to post zero earnings for the current quarter, though that would be an improvement from a year-ago loss of $1.68 a share. According to FactSet, a loss of 15 cents a share is expected for the full year, but turning into a profit of 24 cents a share in 2023. Q2 revenue is expected to jump 39% to $314.5 million. Full-year revenue is pegged at $1.281 billion, up 33%.
The health care stock has the best Composite Rating of 35 companies in the medical software industry group. It also has the second best EPS Rating and Relative Strength Rating in the group, according to MarketSmith.
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The post IBD 50 Stocks To Watch: Medical Group Tops Buy Point, But There's A Downside appeared first on Investor's Business Daily.
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