On Sep 13, shares of UnitedHealth Group Inc. (UNH - Free Report) hit a 52-week high of $200.8.
In a year, the stock has returned 46.5%, slightly outperforming the gain of 45.2% logged by the industry and 15.7% by the S&P 500 index.
What Led to the New High?
The company’s recent acquisition announcements have possibly led to this rally.
According to sources, the company has entered into an agreement to buy a Chilean company, BanMedica. It is a vertically integrated healthcare services company offering health insurance and medical services through its clinics in Chile, Peru and Colombia. The deal boosted investor confidence as it would provide new geographic diversification.
Shares also must have gained from the recently signed agreement to take over the health care business of The Advisory Board Company . The acquisition will bolster the company’s population health management business. It will also strengthen UnitedHealth’s already strong health service segment, Optum.
These moves enable the company to shift its focus from core business, health benefits, which struggles with stringent regulations and an uncertain industry environment.
The company is therefore working on growing other parts of its business which have little or no regulatory interference and has higher profitability. This will enable it to adapt to the government regulations and tap growth opportunities.
A couple of other stocks in the same space, Cigna Corp. (CI - Free Report) and Centene Corp. (CNC - Free Report) hit their respective 52-week high on the same day.
UnitedHealth currently carries a Zacks Rank # 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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