Reports that the drug distributors, AmerisourceBergen (ABC), Cardinal Health (CAH) and McKesson (MCK) have proposed an $18B settlement payable over 18 years to broadly settle outstanding lawsuits resulting from the companies' distribution of opioids should eliminate a longstanding overhang on the group, if finalized, Jefferies analyst Brian Tanquilut tells investors in a research note. With investors generally expecting a settlement of $15B-$25B, payable over a five-to-ten year time frame, the reported settlement proposal should be viewed as a positive, says the analyst. Tanquilut says the $18B payable over 18 years would be better than investors' current expectations. As sector fundamentals are improving, "elimination of long-standing overhang should make the group ownable again," he contends. The analyst prefers Buy-rated McKesson over Hold-rated AmerisourceBergen and Cardinal Health.
Bullish option flow detected in Cardinal Health with 5,851 calls trading, 3x expected, and implied vol increasing almost 4 points to 34.97%. Mar-20 62.5 calls and 2/28 weekly 61 calls are the most active options, with total volume in those strikes near 4,900 contracts. The Put/Call Ratio is 0.09. Earnings are expected on May 7th.
Shares of Mallinckrodt (MNK) are sliding after The Wall Street Journal reported that the company begun confidential discussions with creditors and is considering placing its U. S... To see the rest of the story go to thefly.com. See Story Here