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6 Health Insurance Stocks Poised to Beat on Earnings in Q2

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The health insurance industry has so far had a minimal impact from the COVID-19 outbreak. First-quarter 2020 results from the industry players reflected a favorable position for the space with respect to the coronavirus adversity. Most health insurers reiterated their earlier-provided guidance for 2020.

In the second quarter, insurers are likely to have benefited from premiums covered under government-sponsored plans, namely Medicare Advantage and Medicaid. Commercial health insurance plans are likely to have remained subdued due to stiff competition and more number of employers shifting to Administrative services only (ASO) products, which carry soft profit margins.

Industry participants are also expected to endure headwinds due to high unemployment rate, which might have caused disenrollment among their commercial customers.

The COVID-19 pandemic will provide some relief to insurers’ Medical Loss Ratio (MLR), which is the ratio of premium spent on claims. Since hospitals at large postponed their elective procedures and surgeries, this will positively impact the MLR of health insurers in the form of lower claim outgo. However, this MLR effect will be weak in the second quarter and more visible in the future quarters. A decline in the MLR will aid insurers’ margins.

Players have been building digital platforms to offer their customers digital healthcare benefits. Companies are paying adequate attention to vulnerable members, especially under Medicare and Medicaid coverage by expanding access to its personalized digital care platforms, which dispense up-to-date information on prevention, coverage and care. This, in turn, might have escalated the company’s operating expense.

In the second quarter, the Zacks Health Insurance industry has rallied 23.9% compared with the Zacks S&P 500 composite’s growth of 25.1%.

Stocks That Are Poised to Grow

Our proven model predicts an earnings beat for  a few Health insurance stocks this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise for these companies.

Molina Healthcare, Inc. (MOH - Free Report) has an Earnings ESP of +22.20% and a Zacks Rank of 2, currently. It has an estimated earnings growth rate of 42.12% for the second quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Anthem Inc. (ANTM - Free Report) has a Zacks Rank #2 and an Earnings ESP of +7.61% at present. It has an earnings growth forecast of 82.33% for the second quarter.

Centene Corp. (CNC - Free Report) is currently Zacks #3 Ranked and has an Earnings ESP of +0.01%. It has an expected earnings growth rate of 79.85% for the second quarter.

Humana Inc. (HUM - Free Report) has an Earnings ESP of +1.26% and is Zacks #2 Ranked, presently. It has an earnings growth prediction of 70.91% for the second quarter.

Cigna Corp. (CI - Free Report) is a #2 Ranked player and has an Earnings ESP of +4.27%, currently. Its earnings growth rate is envisioned at 14.88% for the second quarter.

UnitedHealth Group Inc. (UNH - Free Report) presently has a Zacks Rank #2 and an Earnings ESP of +7.69%. Its earnings growth rate is projected at 38.89% for the second quarter.

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