UnitedHealth Group Inc.
) scaled all-time new 52-week high at $88.45 on Sep 4, riding on a
steady growth momentum following solid year-over-year performance
in second-quarter 2014.
Additionally, the growth potential from Obamacare and the recent
announcement of expansion plans have also fuelled optimism in this
Zacks Rank #3 (Hold) stock. Notably, this healthcare insurer's
shares rose about 17.7% since the beginning of 2014.
Yesterday's closing price represents a strong year-to-date
return of about 16.4%, against 8.5% clocked by the S&P 500
index. Average volume of shares traded over the last three months
stands at approximately 3,659K.
UnitedHealth has kept the earnings streak alive with an average
beat of 5.1% in the last four quarters.
On Jul 17, the company reported second-quarter operating
earnings per share (EPS) of $1.42 that surpassed the Zacks
Consensus Estimate of $1.25 and the year-ago quarter EPS of
The upsurge was led by higher revenues, partly offset by higher
medical operating costs. Moreover, UnitedHealth is consistently
benefiting from growth in the Medicaid and Medicare businesses,
along with its robust performance overseas.
UnitedHealth is the largest insurer in the U.S. in terms of the
coverage of people availing health law plans in Colorado, Maryland,
Nevada and New York. In August, the company disclosed its plans to
increase its market coverage by six-folds to 24 states by 2015.
The decision follows the participation of UnitedHealth in the
Obamacare health plans, which have brightened the prospects for its
membership growth and for competitive products in these markets.
Alongside, the company aims to control operating costs going
We believe that prudent management and a sturdy balance sheet
will support UnitedHealth's expansion plans and its leading market
position. These factors also justify the positive sentiment of
investors in the stock. Moreover, the long-term growth rate for
UnitedHealth is pegged at 10.0%, quite close to the peer group's
average of 10.3%.
Stocks to Consider
Investors interested in healthcare stocks could consider stocks
like Universal Health Services Inc. (
), HCA Holdings Inc. (
) and Triple-S Management Corporation (
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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