UnitedHealth Group is Thursday's IBD Stock Of The Day, as the Dow Jones health insurer, coming off solid growth in the third quarter, looks to continue leading the market.
With the market rally coming under pressure after the latest rate hike from the Federal Reserve, health care-related plays, including UnitedHealth stock, continue to hold up, as they tend to be more insulated from inflationary pressures. UNH stock has outperformed the broader market for a long stretch.
Minnetonka, Minn.-based UnitedHealth is also coming off solid third-quarter earnings. The managed care giant increased its profit outlook after beating earnings estimates for Q3 on Oct. 14.
"Growth in the third quarter was driven by continued expansion in the number of people served throughout UnitedHealthcare and in the value-based care initiatives at Optum Health," the Dow Jones health insurance giant said last month.
UnitedHealth earnings rose 28% to $5.79 a share, the second straight quarter of accelerating growth. Revenue rose nearly 12% to $80.894 billion. UNH's full-year EPS forecast is now $21.85-$22.05, up from its prior view of $21.40-$21.90. Analysts had forecast UnitedHealth earnings per share to rise 15% to $21.87.
UnitedHealth's business model aims to contain health costs for its managed care arm, partly by insourcing health services to its own cost-efficient locations. UNH's health insurance arm, UnitedHealthcare, is the largest health insurance company, based on membership, in the country.
UnitedHealth, along with other health insurers, will also see a boost to its Medicare business segment, with the U.S. set to increase Medicare Advantage payments by 8.5% in 2023.
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UnitedHealth Stock
UNH shares advanced 18 cents to 543.61 during market trading Thursday. UnitedHealth stock has formed a big cup-with-handle base with an official 553.23 buy point, according to MarketSmith analysis.
The handle is now long enough to be considered its own base. UnitedHealth stock moved above the buy point on Monday, but had drifted just below that entry.
Shares made an aggressive move above the 50-day moving average on Oct. 21, offering an early entry. UNH stock has gained 5% since then.
Its relative strength line is at new highs, trending up solidly for the past year. The RS line, the blue line in the chart provided, tracks a stock's performance vs. the S&P 500 index. An RS line hitting new highs before the stock does is a bullish sign.
In terms of ratings, UNH sits third in the Medical-Managed Care industry, behind Humana and Molina Healthcare. Humana is extended from a buy zone, along with Cigna, which reported earnings early Thursday. MOH stock has fallen back below a buy point, but rebounded from its 50-day line on Thursday.
UnitedHealth stock has a 97 Composite Rating out of 99. It has a 90 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement that tops at 99. The rating shows how a stock's performance over the last 52 weeks holds up against all the other stocks in IBD's database. The stock's EPS rating is 94.
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