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UnitedHealth (UNH) Hits 52-Week High: Hold it for Steady Growth
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On Aug 19, the stock of UnitedHealth Group Inc. (UNH - Free Report) hit a 52-week high, reaching $428.35 and finally closing a tad lower at $427.89, gaining 2.53%.
Investors have been optimistic about the health insurance sector ever since President Joe Biden took over the reins and supported the Affordable Care Act (ACA). A solid push from the government to make health insurance available to all bodes well for the industry and UnitedHealth being the leader of the pack is sure to gain traction from the same.
Key Catalysts
A Well-Diversified Business: Over the years, UnitedHealth has not just confined itself to a company selling health insurance plans via UnitedHealthcare but has also repositioned itself by vertically integrating across other areas of health care, such as pharmacy management, information and technology-enabled health services business, ambulatory care systems etc. These services are provided by the unit named Optum. Most of the same has been built by making small and big acquisitions over the past several years. No other insurer matches the scale of diversification like UnitedHealth. This is the main reason for its stellar historical results, underscored by an earnings beat for the last several quarters.
UnitedHealth’s flourishing business will continue to propel its earnings. The company is on a continuous hunt for acquiring the best-fitting entity that can add to its capabilities. With a successful integration track record, the company will be able to reap synergies from its judicious takeovers.
Large-Scale Presence in an Attractive Market: UnitedHealth holds the number one spot in the for-profit or private Medicare Advantage (MA) market with other players like Aetna, a unit of CVS, Anthem Inc. , Centene Corp.(CNC - Free Report) and Cigna Corp. (CI - Free Report) following close. UnitedHealthcare has had the largest share of Medicare Advantage enrollment since 2010. Its share of Medicare Advantage enrollment has grown from 19% in 2010 to 27% in 2021. The MA market, which is the private version of the public Medicare plans, is expected to grow at a fast rate as it caters to the aging baby bomber population, which is growing each year. A large market share with many of its plans carrying star ratings should fetch the company impressive membership growth.
International Operations Augur Well: UnitedHealth is one of the few insurers that has presence outside the United States, thus providing it with benefits of geographical diversification. Global business continues to be an early-stage investment area and bodes well for the long term.
Solid Growth Outlook: The company’s guidance raises enough optimism for the long haul. Its long-term earnings per share (EPS) growth view is projected at 13-16% per annum, on average, with about two-thirds (8-11%) of this growth, driven by earnings from operations and one-third (3-5%) from capital deployment.
Sturdy Capital Positon: A consistent favorable cash flow enables it to pursue growth strategies, such as buyouts and capital management via dividend payments and share buybacks. The current dividend yield is 1.36%. Its dividend has grown at a rate of 25.16% rate per year for the past 10 years. With a payout ratio of 30%, dividend growth is well-cushioned by the company’s robust earnings.
Bottomline
The stock is sure to display a share price appreciation by virtue of its strong business and growth visibility It should thus be held for a longer period to maintain stability of one’s investment portfolio.
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UnitedHealth (UNH) Hits 52-Week High: Hold it for Steady Growth
On Aug 19, the stock of UnitedHealth Group Inc. (UNH - Free Report) hit a 52-week high, reaching $428.35 and finally closing a tad lower at $427.89, gaining 2.53%.
In the past year, shares of this currently Zacks Rank #3 (Hold) health insurance leader gained 36% in the past year compared with its industry’s growth of 31%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy)stocks here.
Image Source: Zacks Investment Research
Investors have been optimistic about the health insurance sector ever since President Joe Biden took over the reins and supported the Affordable Care Act (ACA). A solid push from the government to make health insurance available to all bodes well for the industry and UnitedHealth being the leader of the pack is sure to gain traction from the same.
Key Catalysts
A Well-Diversified Business: Over the years, UnitedHealth has not just confined itself to a company selling health insurance plans via UnitedHealthcare but has also repositioned itself by vertically integrating across other areas of health care, such as pharmacy management, information and technology-enabled health services business, ambulatory care systems etc. These services are provided by the unit named Optum. Most of the same has been built by making small and big acquisitions over the past several years. No other insurer matches the scale of diversification like UnitedHealth. This is the main reason for its stellar historical results, underscored by an earnings beat for the last several quarters.
UnitedHealth’s flourishing business will continue to propel its earnings. The company is on a continuous hunt for acquiring the best-fitting entity that can add to its capabilities. With a successful integration track record, the company will be able to reap synergies from its judicious takeovers.
Large-Scale Presence in an Attractive Market: UnitedHealth holds the number one spot in the for-profit or private Medicare Advantage (MA) market with other players like Aetna, a unit of CVS, Anthem Inc. , Centene Corp.(CNC - Free Report) and Cigna Corp. (CI - Free Report) following close. UnitedHealthcare has had the largest share of Medicare Advantage enrollment since 2010. Its share of Medicare Advantage enrollment has grown from 19% in 2010 to 27% in 2021. The MA market, which is the private version of the public Medicare plans, is expected to grow at a fast rate as it caters to the aging baby bomber population, which is growing each year. A large market share with many of its plans carrying star ratings should fetch the company impressive membership growth.
International Operations Augur Well: UnitedHealth is one of the few insurers that has presence outside the United States, thus providing it with benefits of geographical diversification. Global business continues to be an early-stage investment area and bodes well for the long term.
Solid Growth Outlook: The company’s guidance raises enough optimism for the long haul. Its long-term earnings per share (EPS) growth view is projected at 13-16% per annum, on average, with about two-thirds (8-11%) of this growth, driven by earnings from operations and one-third (3-5%) from capital deployment.
Sturdy Capital Positon: A consistent favorable cash flow enables it to pursue growth strategies, such as buyouts and capital management via dividend payments and share buybacks. The current dividend yield is 1.36%. Its dividend has grown at a rate of 25.16% rate per year for the past 10 years. With a payout ratio of 30%, dividend growth is well-cushioned by the company’s robust earnings.
Bottomline
The stock is sure to display a share price appreciation by virtue of its strong business and growth visibility It should thus be held for a longer period to maintain stability of one’s investment portfolio.