UnitedHealth earnings loom Friday morning, kicking off third-quarter results for health insurers with future Medicare Advantage payments also in focus. UNH stock fell Thursday morning after consolidating over the past several weeks.
Molina Healthcare (MOH), Humana (HUM) and Cigna (CI) have been leading the market, trading right around consolidation buy points as investors pour into defense growth names. But Centene (CNC) has come under strain, while CVS Health (CVS) has tumbled, in large part due to its Aetna insurance unit.
UnitedHealth (UNH) is in between. UNH stock has pulled back since Aug. 19 and is trying to hold long-term support. But its relative strength line is right at highs, marked by a blue dot at the end of that line on the weekly MarketSmith chart.
Year to date through Oct. 11, UNH stock carries a 0.5% gain vs. a 24.7% decline for the total U.S. stock market and 18.4% drop for the Dow Jones Industrial Average as a whole.
UnitedHealth Earnings
Estimates: Analysts polled by FactSet expect UnitedHealth earnings to rise 20% vs. a year earlier to $5.43 per share. Revenue is seen climbing 11% to $80.573 billion. That would mark the second straight quarter of faster EPS growth but the second quarter of slightly slowing revenue gains.
Results: Check back early Friday.
Outlook: Analysts forecast UnitedHealth earnings per share to rise 15% to $21.87 in all of 2022. That's near the high end of the health insurance giant's raised full-year EPS guidance of $21.40-$21.90.
UNH Stock
Shares of UnitedHealth fell 1.5% to 492.69 amid a broad decline on the stock market today, falling further below the 200-day moving average. UNH stock has formed a flat base with a 553.23 buy point, but remains well below the entry for now. It's also below the 50-day line.
A strong move above the 50-day line could offer an early entry, depending on market conditions.
That flat base is within a larger consolidation going back six months.
Even though UNH stock has drifted lower, the RS line is right at record highs. That is a sign of outperformance vs. the S&P 500.
Centene, Cigna, Molina and Humana also fell Thursday morning, along with Aetna-owner CVS.
Optum Health, Medicare In Spotlight
When UnitedHealth reports Thursday, its Optum Health subsidiary will be in focus.
The fast-growing Optum unit has become a key driver of UnitedHealth earnings. The service has benefited from the expansion of value-based care initiatives, and further growth in revenue per consumer would be a positive sign.
But on Sept. 5, UnitedHealth and Amazon (AMZN) lost their reported bids to acquire home care tech platform Signify Health. Instead, CVS Health purchased Signify Health (SGFY) in a deal valued at $8 billion.
UnitedHealth's Optum offers similar aging-in-place services, via the purchase of Landmark Health in 2021. It also announced the purchase of home health provider LHC Group in April.
At-home services are key for Medicare members.
For health insurers, the Medicare business itself is favorably poised for growth, with the U.S. set to boost Medicare Advantage payments by 8.5% in 2023.
However, UnitedHealth, along with Centene and CVS' Aetna, will lose Medicare Advantage bonus payments due to lower performance ratings. That news hit all three stocks last Friday.
Investors in UNH stock will look for continued growth in Medicare and Medicaid membership.
They will also watch UnitedHealth's medical cost ratio. Analysts expect it to decline 0.8% to 82.4%.
The metric measures benefits paid as a share of premiums, so lower is better for the company.
https://www.investors.com/news/unh-stock-unitedhealth-earnings-q3-2022/
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