What Happened?
A number of stocks jumped in the afternoon session after a Politico report revealed that the White House plans to pitch a two-year extension of Obamacare subsidies. The proposal would extend subsidies set to expire at the end of the year, with new eligibility limits for individuals with incomes up to 700% of the federal poverty line. These subsidies, a key part of the Affordable Care Act (ACA), help lower the cost of health insurance for consumers, making them crucial for insurers focused on the ACA marketplace. An extension would likely support sustained enrollment, securing a key revenue stream for these companies.
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:
- Health Insurance Providers company Alignment Healthcare (NASDAQ:ALHC) jumped 6.5%. Is now the time to buy Alignment Healthcare? Access our full analysis report here, it’s free for active Edge members.
- Healthcare Technology for Patients company Hims & Hers Health (NYSE:HIMS) jumped 6.2%. Is now the time to buy Hims & Hers Health? Access our full analysis report here, it’s free for active Edge members.
- Outpatient & Specialty Care company Surgery Partners (NASDAQ:SGRY) jumped 4.5%. Is now the time to buy Surgery Partners? Access our full analysis report here, it’s free for active Edge members.
- Testing & Diagnostics Services company Guardant Health (NASDAQ:GH) jumped 4.6%. Is now the time to buy Guardant Health? Access our full analysis report here, it’s free for active Edge members.
- Specialized Medical & Nursing Services company Pediatrix Medical Group (NYSE:MD) jumped 3%. Is now the time to buy Pediatrix Medical Group? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Alignment Healthcare (ALHC)
Alignment Healthcare’s shares are very volatile and have had 23 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 3 days ago when the stock gained 4.4% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
Alignment Healthcare is up 54.5% since the beginning of the year, but at $17.86 per share, it is still trading 9.7% below its 52-week high of $19.78 from April 2025. Investors who bought $1,000 worth of Alignment Healthcare’s shares at the IPO in March 2021 would now be looking at an investment worth $1,032.
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