Conclusion, Investment Implications, Strategy

Premier, Inc. (PINC) is testing major underlying supprot near $37.40 per share while monthly oversold, setting up favorable conditions for its late 2020 major uptrend to resume and a potential low-risk buying opportunity.  A sustained rise above the $37.40 area would target an additional 10% rise to $41.72.  This is an Asbury Value trade idea.

Analysis and Rationale

Premier, Inc. (PINC), together with its subsidiaries, operates as a healthcare improvement company in the United States. It operates in two segments, Supply Chain Services and Performance Services. The Supply Chain Services segment offers its members with an access to a range of products and services, including medical and surgical products, pharmaceuticals, laboratory supplies, capital equipment, information technology, facilities and construction, and food and nutritional products, as well as purchased services, such as clinical engineering and document shredding. The Performance Services segment offers PremierConnect for members to address existing cost and quality imperatives, to manage a value-based care reimbursement model, and support their regulatory reporting framework; performance improvement collaboratives; and consulting and insurance management services, such as creation and management of health benefit programs under Contigo Health brand, as well as health systems and suppliers cost management solutions under Remitra brand. Premier, Inc. was incorporated in 2013 and is headquartered in Charlotte, North Carolina.

The upper panel of Chart 1 below plots PINC daily since January 2021 along with its 200-day moving average, a widely-watched major trend proxy currently at $37.40 which the stock is currently testing as major underlying support.  The lower panel plots monthly overbought/oversold conditions according to the 21-day (monthly) Stochastic oscillator.  The green highlights show that PINC is currently rising out of monthly oversold extremes, and that previous instances of this coincided with Tactical bottoms in November, June, and March of 2021. 

These conditions suggest another similar low-risk buying opportunity now.

Chart 1

Table 1 below shows that, considering a $41.72 upside target and a protective stop placed below the $36.59 area, a long entry price of $37.84 would provide a 1:3.1 risk/reward ratio (risking $1.00 to make $3.10) with an initial risk of 3.3%.

Table 1

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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.