Surprise in one of the weakest groups?
Market analyst – IFC Markets
"UnitedHealth Group Incorporated is an American multinational managed healthcare and insurance company based in Minnetonka, Minnesota. It offers health care products and insurance services. UnitedHealth Group is the world's eighth-largest company by revenue, second-largest healthcare company behind CVS Health by revenue, and the largest insurance company by net premiums. UnitedHealthcare revenues comprise 80% of the Group's overall revenue. The company is ranked 8th on the 2021 Fortune Global 500." (Wikipedia)
UNH closed at $468.45 last Friday, and before its earnings reports on January 19, it will have just one trading-day, since the market was closed on Monday, and the report will be before the market opens on Wednesday. Its 52 weeks average price was between 320.35 - 509.23, with a $523.21 Average Target Price and $441.44B market capitalization.
While the company has been beating estimates in all the past four published earnings reports, the Zacks Consensus Estimate for earnings per share is $4.30, 70.6% higher than the year-ago quarter's reported figure. The consensus estimate for revenues stands at $73B, showing 11.7% growth from the prior-year quarter's reported number.
The Healthcare sector was one of the worst sectors in the past six months. For the fourth quarter of 2021, as we can see in the bellow figure, it was the second worse sector with a -2.16% fall. Estimates show that UnitedHealthcare, the UNH’s largest segment can increase by more than 11% with solid insurance sales. However, looking at the below figure, suggesting to be a bit more cautious. Most hospitals in the last quarter of 2021 also were busy with Covid cases and fewer people were ready to risk and go to hospitals for their other inquiries, such a dental and vision plans. On the other hand, as Covid risks diminish, people will be more encouraged to go after their unnecessary and lagged behind treatments, especially if Biden's Back Better Plan (BBB) will be passed. BBB has more budget for public insurance, and for sure companies, like UNH, will benefit from that. Therefore, the outlook must be bright, and it will help by itself to hold the stock in a buy position for longer-term investment.
On the other hand, Optum and Optum Insight, with counting on growth in services and technology offerings, and improved productivity supposed to have the best performance among all segments with nearly 12% gain, compared with the same quarter in 2020.
Despite mentioned optimist on a few segments, the overall outlook is natural for the company, as COVID-19 testing and treatment costs can decrease the company profits.
As Zacks Ranking for United Health carries is #3, (Holding the position), technically also we are in a side movement, as long as it moves between 20 and 50 DMA, respectively at $486 and $468. RSI at 45 on the other hand signaling that if we have another selling pressure, it can fall under 40 and put more pressure on bears to go deeper towards the next supports at $454 and $436. At an optimistic glance with a positive report, we can see it all-time high above $509 as the next target.