According to the company's website, McKesson (NYSE: MCK, Stock Forum) is the oldest and largest health-care services company in the United States. The firm provides information and care management products and services designed to reduce costs and improve quality of the healthcare industry. McKesson operates in the U.S., Canada, the United Kingdom, and Europe.
The market turmoil this year hasn't been kind to MCK shares. Since January 2008, the company has shed about 43% of its market capitalization, as investors and businesses struggle with a global economic slowdown.Technically speaking, the stock continues to be plagued by its declining 10-day and 20-day moving averages. MCK last closed a session above this repressive duo on September 8.
What's more, the shares have recently breached long-term support at the round-number 40 level, and are accelerating to the downside. In Tuesday's trading, MCK set a new multi-year low just above potential support at the 35 level. Should the shares break below this region of key technical support, we could see the stock extend its poor price action during the intermediate term.
Turning to investor sentiment, many traders appear to believe that the worst is over for MCK. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.22 indicates that calls outnumber puts among near-term options by nearly five to one. Furthermore, this ratio ranks at an annual low, meaning that options traders have not been more bullish toward MCK during the past year.
A look at the equity's November open interest configuration underscores the rampant optimism levied against MCK. Peak call open interest for the front-month series rests at the out-of-the-money 40 strike, totaling more than 2,500 contracts. In addition, another 2,000 calls reside at the deep out-of-the-money November 65 strike. By comparison, peak put open interest for the series resides at the 37.50 strike, totaling a mere 700 contracts. This skew toward deep out-of-the-money calls means that investors are not looking for MCK to fall much further, and could set this speculative group up for disappointment should the equity extend its recent downtrend.
Outside of the options pits, MCK is attracting bullish sentiment. According to Zacks, 10 of the 15 analysts following the shares rate them a "buy" or better, with nary a "sell" rating to be found. With the shares in free-fall mode, analysts could take this opportunity to issue a downgrade or two, potentially adding to the selling pressure plaguing MCK shares.
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