Top 2 Health Care Stocks That May Fall Off A Cliff This Quarter

Alphatec Holdings (ATEC) and Travere Therapeutics (TVTX), two healthcare sector stocks, recently reported better-than-expected third-quarter financial results and/or raised guidance, leading to significant stock gains of 12% and 24% respectively over the past month. Despite these strong fundamental performances, both companies are now exhibiting high Relative Strength Index (RSI) values above 80, indicating they are technically overbought. This technical signal, coupled with slight declines in their share prices on Thursday, suggests a potential cautionary note for momentum-focused investors.

Analysis

Alphatec Holdings (NASDAQ:ATEC) and Travere Therapeutics (NASDAQ:TVTX) recently reported better-than-expected third-quarter financial results, with ATEC also raising its FY25 sales guidance above estimates. ATEC's CEO highlighted "industry-leading results," while TVTX's CEO noted "outstanding commercial performance" for FILSPARI, reflecting strong underlying business momentum. These positive fundamental developments led to significant stock appreciation over the past month, with ATEC gaining approximately 12% and TVTX rising around 24%.

Despite robust fundamental performance, both stocks are exhibiting strong technical signals of being overbought. ATEC's Relative Strength Index (RSI) stands at 82.5, and TVTX's RSI is 80.9, both well above the typical 70-threshold indicating an overbought condition. This technical overextension is further highlighted by slight price declines on Thursday, with ATEC falling 1% to $16.33 and TVTX dropping 1.1% to $29.65.

The combination of strong recent price appreciation, positive fundamental news, and highly overbought RSI readings presents a mixed signal, particularly for momentum-focused investors. Both companies are trading near their 52-week highs ($17.14 for ATEC, $30.97 for TVTX), suggesting potential limited immediate upside from a technical perspective. ATEC also carries a high 91.00 Momentum score from Edge Stock Ratings, underscoring its recent strength.

This situation suggests that while the underlying businesses are performing well, the stocks may be due for a short-term consolidation or pullback, making entry points for new momentum-driven positions less attractive at current levels.

Key Decisions for Investors

• Investors should closely monitor RSI and price action for potential short-term pullbacks or consolidation, despite strong fundamental performance.
• For new positions, consider waiting for a more favorable entry point following any technical correction, rather than chasing recent momentum.
• Existing holders should re-evaluate their risk/reward profile given the overbought technicals and proximity to 52-week highs, potentially trimming positions or setting tighter stop-losses.