What Happened?
A number of stocks jumped in the afternoon session after positive inflation data fueled hopes for an interest rate cut by the Federal Reserve. The latest Consumer Price Index (CPI) report showed inflation rose by a modest 0.2% in July and 2.7% over the last year. This cooler-than-expected data prompted a significant market rally, with the S&P 500, Dow, and Nasdaq all climbing as investors grew more optimistic. The prevailing view is that easing inflation gives the central bank room to lower interest rates. Lower rates typically reduce borrowing costs for businesses and make stocks more attractive relative to bonds, contributing to widespread gains across sectors like healthcare.
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:
- Specialized Medical & Nursing Services company AMN Healthcare Services (NYSE: AMN) jumped 9.2%. Is now the time to buy AMN Healthcare Services? Access our full analysis report here, it’s free.
- Testing & Diagnostics Services company NeoGenomics (NASDAQ: NEO) jumped 4.4%. Is now the time to buy NeoGenomics? Access our full analysis report here, it’s free.
- Hospital Chains company Acadia Healthcare (NASDAQ: ACHC) jumped 5.7%. Is now the time to buy Acadia Healthcare? Access our full analysis report here, it’s free.
- Senior Health, Home Health & Hospice company BrightSpring Health Services (NASDAQ: BTSG) jumped 3.1%. Is now the time to buy BrightSpring Health Services? Access our full analysis report here, it’s free.
- Drug Development Inputs & Services company Repligen (NASDAQ: RGEN) jumped 6.9%. Is now the time to buy Repligen? Access our full analysis report here, it’s free.
Zooming In On AMN Healthcare Services (AMN)
AMN Healthcare Services’s shares are very volatile and have had 27 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 1 day ago when the stock dropped 5% on the news that analyst firm BMO Capital lowered its price target on the stock to $22.00 from $27.00. The price target reduction from BMO Capital followed AMN's second-quarter earnings report, where the company issued third-quarter revenue guidance below consensus expectations. AMN projects its Q3 revenue to fall between 9% and 11% compared to the prior year. Management attributed the weaker outlook to an “uncertain healthcare policy environment” and macroeconomic volatility, which has caused clients to slow down decision-making. BMO Capital noted that healthcare staffing volumes have been negatively impacted, particularly at Academic Medical Centers that depend on federal funding. While AMN's second-quarter results had surpassed estimates, the soft forward guidance prompted the more cautious analyst rating.
AMN Healthcare Services is down 26.5% since the beginning of the year, and at $18.04 per share, it is trading 66.7% below its 52-week high of $54.15 from August 2024. Investors who bought $1,000 worth of AMN Healthcare Services’s shares 5 years ago would now be looking at an investment worth $343.33.
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