3 Health Insurers That Surpass the S&P 500 Year to Date
The S&P 500 Index has started showing signs of recovery after facing a few steep months. Year to date, the benchmark index has gained 6.7%. The S&P 500 saw its worst first quarter ever (down 20%) this year due to the coronavirus outbreak. Last year, it rose on the back of a global shift in monetary policy coupled with progress in the U.S-China trade deal that helped the stocks scale up.
Investors’ confidence now rises with progress in COVID-19 vaccine trials, better employment rate and an improved reading on the back of manufacturing activities. The gigantic Fed and government stimulus facilitated this rally. The momentum continues as economies are reopening.
Meanwhile, the health insurance industry has so far had a minimal impact from the COVID-19 outbreak. In fact, the pandemic provided some relief to insurers’ Medical Loss Ratio (MLR), which is the ratio of premiums spent on claims. With maximum hospitals postponing the elective procedures and surgeries, it positively impacted the MLR of health insurers in the form of lower claim outgo. Thus, a decline in the MLR is expected to continue aiding insurers’ margins.
Most health insurers reiterated their earlier-provided guidance for 2020. The industry continues to grow on a strong Medicaid business, aging American population, rising enrolment, top-line growth, increasing contribution from complementary businesses, product modifications, improved services, better claims handling, disciplined medical cost management, technological investment and upgrade, and healthy balance sheets.
Moreover, Bernie Sanders’ exit from the presidential race has been a positive for health insurers as he favored Medicare-For-All and intended to abolish private insurance, which were detrimental to health insurers’ interests.
In the first half of 2020, many health insurers, such as Anthem Inc. ANTM witnessed a rise in the usage of Telehealth and virtual care services. Given the current scenario and rising demand for telemedicine in behavioral health as well, we expect many health insurers to gain traction from this business line.
3 Health Insurance Outperformers YTD
Here are some health insurers, which have managed to outperform the S&P 500 Index so far this year. Also, these stocks carry an impressive Growth Score of A. This style score analyzes the growth prospects of a company.
UnitedHealth Group, Inc. UNH provides a wide range of health care products and services, such as health maintenance organizations (HMOs), point of service plans (POS), preferred provider organizations (PPOs) and managed fee-for-service programs. The stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company has witnessed its 2020 and 2021 earnings estimates move 0.1% up each over the past 30 days. The stock has risen 7.7% year to date.
Molina Healthcare Inc. MOH is a multi-state managed care organization, participating exclusively in government-sponsored healthcare programs. It presently has a Zacks Rank of 3 and has witnessed its 2021 earnings estimate move 2% north over the past 30 days. The stock has surged 38.9% year to date.
Humana Inc. HUM is one of the largest health care plan providers in the United States. With a Zacks Rank #2 (Buy) at present, the company has witnessed its 2020 and 2021 earnings estimates move 0.2% and 0.8% north, respectively, over the past month. Year to date, the stock has jumped 14.7%.
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