UnitedHealth reported second-quarter earnings and revenue that beat estimates
Dow component UnitedHealth Group Inc (NYSE:UNH) is lower this morning, despite reporting second-quarter earnings and revenue that exceeded analysts' expectations. The healthcare concern also upped its full-year profit forecast, but the company's CFO predicted 2019 revenue that comes in "at or just slightly below" the previously given range. The earnings report comes just days after the Trump administration withdrew a plan to end rebates paid to insurance companies by drug manufacturers. Meanwhile, UnitedHealth CEO David Wichmann said the company will stick to its plan of implementing point-of-sale rebates to members. At last check, UNH shares are down 1.5% at $262.70.
Save for today's drop, UNH has been on a tear of late, with only two of its last 11 sessions ending in the red. Just yesterday, the equity was briefly trading atop the $268 region for the first time since late February. Even with a negative earnings reaction priced in, though, UnitedHealth stock is pacing for its best month since January, up 7.6% so far in July, as set to topple its 10-month moving average for the first time in six months.
Analysts at Cantor Fitzgerald called UnitedHealth's earnings "solid," reiterating an "overweight" rating on the blue chip. Even before today, analyst sentiment surrounding UNH was extremely optimistic, with all but one of the brokerage firms in coverage calling the stock a "buy" or better. The consensus 12-month price target of $288.45, however, represents a slim 9.8% premium to current levels.
Things have been bullish in the options pits, too, with nearly two calls bought to open for every put on the on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the last 10 days. This ratio sits in the 74th percentile of its annual range, suggesting a much healthier-than-usual appetite for bullish bets during the past two weeks.