Anthem is Wednesday's IBD Stock Of The Day. The managed-care giant is benefiting from new growth opportunities as well as the fading of Covid and public policy risk. ANTM stock climbed near a buy point as the stock market executed its fourth rebound in five days, even as the Russia-Ukraine conflict rattles global markets.
Anthem is participating in a group move among managed care stocks all lifted by some of the same forces. Among those forces is the growth of Medicare Advantage. The sector combines both growth — Anthem's guidance implies 11% revenue growth in 2022 — and defensive characteristics, since the government pays for a lot of health coverage and people generally keep their commercial insurance unless they lose their job.
ANTM stock is rated No. 2 in its industry group. It holds a 95 IBD Composite Rating, a single measure combining technical and fundamental factors. Molina Healthcare, No. 1 in the group, also is closing in on a buy point. Ditto for Dow Jones behemoth UnitedHealth Group and Centene. You can find the leaders in each industry group at IBD Stock Checkup.
ANTM is part of the elite IBD Leaderboard portfolio. On Wednesday, IBD SwingTrader seized on ANTM stock's break above resistance to add a position.
ANTM Stock Analysis
ANTM stock climbed 3.2% to 466.10, while breaking above its 50-day moving average in Wednesday stock market action. During the stock market correction, Anthem had been relatively solid, finding support at its 10-week moving average.
ANTM's relative strength line, the blue line in the chart provided that tracks a stock's progress vs. the S&P 500, is hitting a multiyear high. That was an indication the stock might be poised to make a move higher once more constructive action resumed.
ANTM stock offers several possible entry points. MarketSmith shows a flat-base buy point of 470.12, 10 cents above the Dec. 30 high. On Wednesday, SwingTrader established a position on the break above the 50-day line and past the 459.88 crest of the prior move past that key technical level.
Keep in mind, the stock market is still seeking to establish a new uptrend. Be sure to read IBD's The Big Picture column each afternoon to stay on top of the prevailing market trend and what it means for your trading decisions.
Anthem Outlook
Anthem's 2022 guidance in late January built in expectations for "another year in which the overall cost of care will track above normalized levels driven by Covid-related treatment, vaccination and testing costs," CFO John Gallina said.
Political risk has also faded with slimmer prospects for Build Back Better and any major overhaul of Medicare or drug pricing.
Anthem is also benefiting from what CEO Gail Boudreaux calls its "transformation from a health benefits company to a lifetime trusted partner in health." That alludes partly to the company's expansion into prescription benefit management via its IngenioRx arm. That's a move Anthem made later than some of its managed-care rivals.
In addition, Anthem stock is getting a boost as the company expands exposure to value-based care, via investments in primary care providers and aggregators. Getting paid through value-based arrangements is another way to get paid for delivering quality care at a low cost, since the aesthetics aren't great when a managed-care firm's medical costs are too low as a share of premiums.
