IPO Stock Of The Week: Pacs Group Plunges Through Key Level After Earnings Weakness

IPO Stock Of The Week Pacs Group (PACS) plunged Friday, breaking down below a key level. Pacs stock was in Investor’s Business Daily’s IPO Leaders screen and had been nearing a buy point ahead of the health care holding company’s fourth-quarter earnings report.

Founded in 2013, Pacs Group operates more than 300 skilled nursing facilities and assisted living facilities across 17 states.

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Pacs earned 42 cents per share, according to MarketSurge data, missing Wall Street’s consensus estimate of 45 cents. Sales rose 12% to $1.35 billion in the fourth quarter.

The company also provided a full-year outlook for 2026. It expects revenue in the range of $5.65 billion to $5.75 billion and adjusted EBITDA of $555 million to $575 million. Analysts polled by FactSet projected, on average, revenue of $5.71 billion and adjusted EBITDA of $548.2 million.

In November, Pacs said it caught up with filing obligations with the Securities and Exchange Commission and posted a strong full-year sales outlook, assuaging investor worries. In response, shares leapt to their highest level since November 2024.

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Pacs Stock Breaks Key Level

On Friday, Pacs stock plunged nearly 13% in afternoon trade, breaking below its 50-day moving average. That’s a key sell signal.

When a stock that has been trending higher for months falls under its 50-day line, that suggests institutional selling is occurring, especially if the break happens in heavy volume. Volume was tracking nearly 300% above average on Friday.

The stock had been forming a cup with handle with a 42.09 buy point, according to its IBD MarketSurge chart. But that buy point is no longer valid, and the stock will need to form another base before a new buying opportunity emerges.

Friday’s action underscores the danger of jumping into a stock ahead of a proper breakout, especially ahead of a quarterly earnings report.

In the IBD Stock Checkup, Pacs stock shows a near-best 98 IBD Composite Rating, which illustrated the name’s robust all-around strength. But that rating will almost surely deteriorate following Friday’s bearish action.

**As Wall Street Wavers, What’s An Investor To Do? Start Here

**

Be sure to follow Scott Lehtonen on X at @IBD_SLehtonen for more on the Dow Jones Industrial Average and the stock market today.

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