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Healthcare ETFs in Focus on UnitedHealth's Q2 Earnings
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The largest U.S. health insurer UnitedHealth Group (UNH - Free Report) reported mixed second-quarter 2019 results. The company breezed past the Zacks Consensus Estimate on earnings but lagged on revenues. It raised its full-year forecast.
Earnings per share came in at $3.60, well above the Zacks Consensus Estimate of $3.46 and 15% higher than the year-ago quarter. Revenues rose 8% year over year to $60.6 billion, falling slightly short of the estimated $60.7 billion. The year-over-year performance was driven by double-digit percentage revenue growth at UnitedHealthcare Medicare & Retirement, OptumRx and OptumHealth.
The company increased its adjusted earnings per share guidance for 2019 to $14.70-$14.90 from $14.50-$14.75 (see: all the Healthcare ETFs here).
Despite the earnings beat and increased earnings per share guidance, UNH shares dropped 2.3% at the close of day. The stock currently has a Zacks Rank #4 (Sell) and a VGM Score of A. It belongs to a top-ranked Zacks industry (top 13%), which underscores its potential to outperform in the weeks ahead.
Given this, ETFs having the largest allocation to this health insurance giant are in focus. We have highlighted them in detail below:
iShares U.S. Healthcare Providers ETF (IHF - Free Report)
This ETF follows the Dow Jones U.S. Select Healthcare Providers Index with exposure to companies that provide health insurance, diagnostics and specialized treatment. In total, the fund holds 47 securities in its basket and UNH occupies the top position with 22.9% share. The fund has amassed $980 million in its asset base, while volume is good at about 114,000 shares per day on average. It charges 43 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Best & Worst ETFs Halfway Through July).
iShares Evolved U.S. Healthcare Staples ETF
This actively managed ETF employs data science techniques to identify companies with exposure to the health care staples sector. It holds 160 stocks in its basket with UnitedHealth taking the top spot at 11.9%. The fund has accumulated $7.4 million in its asset base and sees meager volume of 3,000 shares. It charges 18 bps in annual fees (read: ETFs to Shine as Trump Tosses Drug Rebate Curb Plan).
The most popular health care ETF, XLV follows the Health Care Select Sector Index. This fund manages nearly $17.7 billion in its asset base and trades in heavy volume of around 11.2 million shares. Expense ratio comes in at 0.13%. In total, the fund holds 62 securities in its basket, with UNH taking the two spot at 7.3% of the assets. Pharma accounts for 31.6% share from a sector look, while health care equipment and supplies, health care providers and services, and biotech have double-digit exposure each. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
This fund offers exposure to 130 securities by tracking the Dow Jones U.S. Health Care Index. Here again, UnitedHealth is the second firm accounting for 6.8% of the total assets. In terms of industrial exposure, pharma takes the top spot at 30.1%, followed by health care equipment (23.9%) and biotech (17.3%). The product has amassed nearly $2.2 billion in its asset base, while charging 43 bps in annual fees. It trades in good volume of around 102,000 shares a day and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Healthcare ETFs in Focus on JNJ's Q2 Earnings Beat).
This ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 391 stocks in its basket. Of these, UNH takes the third spot with 5.7% allocation. Pharma takes the largest share at 29.1%, while health care equipment and biotech round off the top three spots. VHT is also one of the popular and liquid ETFs with AUM of $9.2 billion and average daily volume of about 252,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
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Healthcare ETFs in Focus on UnitedHealth's Q2 Earnings
The largest U.S. health insurer UnitedHealth Group (UNH - Free Report) reported mixed second-quarter 2019 results. The company breezed past the Zacks Consensus Estimate on earnings but lagged on revenues. It raised its full-year forecast.
Earnings per share came in at $3.60, well above the Zacks Consensus Estimate of $3.46 and 15% higher than the year-ago quarter. Revenues rose 8% year over year to $60.6 billion, falling slightly short of the estimated $60.7 billion. The year-over-year performance was driven by double-digit percentage revenue growth at UnitedHealthcare Medicare & Retirement, OptumRx and OptumHealth.
The company increased its adjusted earnings per share guidance for 2019 to $14.70-$14.90 from $14.50-$14.75 (see: all the Healthcare ETFs here).
Despite the earnings beat and increased earnings per share guidance, UNH shares dropped 2.3% at the close of day. The stock currently has a Zacks Rank #4 (Sell) and a VGM Score of A. It belongs to a top-ranked Zacks industry (top 13%), which underscores its potential to outperform in the weeks ahead.
Given this, ETFs having the largest allocation to this health insurance giant are in focus. We have highlighted them in detail below:
iShares U.S. Healthcare Providers ETF (IHF - Free Report)
This ETF follows the Dow Jones U.S. Select Healthcare Providers Index with exposure to companies that provide health insurance, diagnostics and specialized treatment. In total, the fund holds 47 securities in its basket and UNH occupies the top position with 22.9% share. The fund has amassed $980 million in its asset base, while volume is good at about 114,000 shares per day on average. It charges 43 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Best & Worst ETFs Halfway Through July).
iShares Evolved U.S. Healthcare Staples ETF
This actively managed ETF employs data science techniques to identify companies with exposure to the health care staples sector. It holds 160 stocks in its basket with UnitedHealth taking the top spot at 11.9%. The fund has accumulated $7.4 million in its asset base and sees meager volume of 3,000 shares. It charges 18 bps in annual fees (read: ETFs to Shine as Trump Tosses Drug Rebate Curb Plan).
Health Care Select Sector SPDR Fund (XLV - Free Report)
The most popular health care ETF, XLV follows the Health Care Select Sector Index. This fund manages nearly $17.7 billion in its asset base and trades in heavy volume of around 11.2 million shares. Expense ratio comes in at 0.13%. In total, the fund holds 62 securities in its basket, with UNH taking the two spot at 7.3% of the assets. Pharma accounts for 31.6% share from a sector look, while health care equipment and supplies, health care providers and services, and biotech have double-digit exposure each. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
iShares U.S. Healthcare ETF (IYH - Free Report)
This fund offers exposure to 130 securities by tracking the Dow Jones U.S. Health Care Index. Here again, UnitedHealth is the second firm accounting for 6.8% of the total assets. In terms of industrial exposure, pharma takes the top spot at 30.1%, followed by health care equipment (23.9%) and biotech (17.3%). The product has amassed nearly $2.2 billion in its asset base, while charging 43 bps in annual fees. It trades in good volume of around 102,000 shares a day and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Healthcare ETFs in Focus on JNJ's Q2 Earnings Beat).
Vanguard Health Care ETF (VHT - Free Report)
This ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 391 stocks in its basket. Of these, UNH takes the third spot with 5.7% allocation. Pharma takes the largest share at 29.1%, while health care equipment and biotech round off the top three spots. VHT is also one of the popular and liquid ETFs with AUM of $9.2 billion and average daily volume of about 252,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>