JED GRAHAM 9:36 AM ET
UnitedHealth Group (UNH), the nation's largest insurer,
reported third-quarter earnings early Tuesday that easily topped Wall Street
expectations. A Dow Jones component, UnitedHealth stock climbed after
the report, helping to lift Dow and broader stock market futures.
UnitedHealth Earnings
Estimates: Analysts expected
UnitedHealth earnings per share to climb 10% to $3.75 on revenue growth of 5.4%
to $59.62 billion, according to Zacks Investment Research.
Results: UnitedHealth
earnings rose 14% to $3.88 a share. Revenue climbed 6.7% to $60.35 billion.
Outlook: The Dow Jones stock
raised 2019 guidance for adjusted EPS to a range of $14.90-$15.00 vs. prior
guidance of $14.70-$14.90, up 15 cents at the midpoint. Before UnitedHealth's
13-cents Q3 beat, analysts expected full-year UnitedHealth earnings per share
of $14.84.
On the UnitedHealth
earnings call, CEO David Wichmann guided to the lower end of the insurer's 2020
adjusted guidance, saying he wanted to be conservative. But he's bullish on
Medicare Advantage programs.
UnitedHealth Stock
Shares soared 6.5% to 235
in morning trade in Tuesday's stock market trading. UnitedHealth stock
reclaimed its 50-day line.
UnitedHealth stock has
slumped 23% since hitting an all-time high of 287.94 last December. Sentiment
shifted not long after Democrats regained control of the House last November,
raising the profile of left-wing Medicare for All legislation. Soft revenue
guidance for the second half of the year issued in July also undercut the
stock, which had been approaching a buy point.
Other health insurers
have been struggling. Anthem stock jumped 4.5%, Centene stock 1.7% and Humana
stock 3.2%. Cigna stock and Molina stock rose more than 4%.
UnitedHealth has a 95 EPS
rating from IBD, meaning that its steady earnings growth has topped 95 of all
companies. But its poor 24 Relative Strength rating shows the stock has been a
laggard.
Jefferies analyst David
Windley downgraded UnitedHealth last week and cut his price target from to 235
from 300, saying political clouds hanging over the managed care industry won't
begin to part for at least nine months. He also cut price targets for Anthem (ANTM), Centene (CNC), Cigna (CI), Humana (HUM) and Molina (MOH).
Medicare For All
While plans that would
wipe out commercial insurance seem very unlikely to pass — even if
Democrats take the White House and Senate — a less-disruptive push to
allow a Medicare buy-in for those younger than 65 remains within the realm of
possibility.
UnitedHealth has about 27
million commercial insurance members out of about 50 million total.
UnitedHealthcare, the
company's managed-care division, has seen growth driven by an expansion of its
Medicare Advantage. In Q3, Medicare Advantage customers rose nearly 450,000
from a year ago.
No comments:
Post a Comment