Top 2 Health Care Stocks That May Fall Off A Cliff In August

As of August 20, 2025, two healthcare stocks, Tarsus Pharmaceuticals (TARS) and Premier Inc (PINC), are exhibiting overbought signals, potentially concerning momentum-focused investors. Tarsus, despite reporting strong XDEMVY sales and a 27% monthly stock surge, registered an RSI of 76.2. Similarly, Premier, following better-than-expected Q4 results and a 25% monthly gain, shows an RSI of 86.9. These elevated RSI values, typically indicating an overbought condition, suggest that recent significant price appreciation may be unsustainable in the short term, despite positive fundamental developments.

Analysis

Two healthcare sector stocks, Tarsus Pharmaceuticals (TARS) and Premier Inc. (PINC), are exhibiting overbought technical signals following substantial monthly gains, creating a potential divergence between strong fundamentals and short-term price risk. Tarsus, with a Relative Strength Index (RSI) of 76.2, saw its stock rise approximately 27% in the past month, fueled by commentary on its 'strongest quarter to date' with over $100 million in net sales for its XDEMVY product, despite the company posting 'mixed' overall quarterly results. The stock's recent 1.7% decline to $53.70 may signal the beginning of a consolidation phase. Concurrently, Premier Inc. registered an even more extreme RSI of 86.9 after a 25% monthly gain. This momentum was propelled by better-than-expected fourth-quarter financial results and a positive outlook from its CEO, who noted that contract renewal headwinds are now mostly resolved. Unlike Tarsus, Premier's shares continued to climb, gaining 7.3% to close at $26.21, indicating that strong fundamental news is currently outweighing the technical caution for that specific name.

Key Decisions for Investors

• Given the elevated RSI values for both TARS (76.2) and PINC (86.9), investors should be cautious of a potential short-term price correction or consolidation following the recent significant run-up.
• For Tarsus, the contrast between the overbought signal and the strong underlying sales growth for XDEMVY warrants monitoring; the 1.7% price dip could represent an early sign of a pullback.
• For Premier, despite the very high RSI, the continued positive price action suggests strong conviction following its earnings beat, though this exacerbates the risk of a sharper reversal if momentum fades.
• Investors with existing long positions could consider trimming to realize recent gains, while those looking to enter might wait for a pullback to a more attractive entry point rather than chasing the current momentum.