Dow Jones insurance giant UnitedHealth Group is the IBD Stock Of The Day. UNH stock has been tightening in its buy zone for nearly three weeks, creating a new entry.
UnitedHealth and its competitors Centene and Cigna have been market leaders for several weeks. UNH stock is on IBD Leaderboard as well.
Health care and insurance stocks have been defensive plays for investors in a tough 2022. That's reflected in UnitedHealth's performance this year. UNH stock is up nearly 40% year to date, spurred by strong quarterly earnings and a raised outlook.
UnitedHealth Earnings
While health insurers, like many medical stocks, have a defensive quality, they also offer solid growth.
UnitedHealth earnings rose 18.5% vs. a year earlier, with revenue up nearly 13% to $80.33 billion. Both easily beat second-quarter estimates. During the period, UNH added 55,000 Medicare Advantage members and 180,000 Medicaid members. Its domestic commercial membership grew 80,000.
UNH raised full-year earnings guidance to a range of $21.40-$21.90, from $21.20-$21.70. Meanwhile, institutional investors steadily increased fund ownership to 5,342 funds as of June from 4,872 in December.
UNH Stock Analysis
UnitedHealth rose 2% to 543.70 in Friday's trading.
UNH stock broke out from its cup-with-handle base on July 15 on its Q2 earnings, clearing a buy point of 518.80 on the weekly charts. On a weekly chart, UnitedHealth stock topped a different handle entry of 534.15. Shares are still in range of both buy points, trading tightly for the past few weeks.
UNH stock nearly forged a three-weeks-tight entry, but the 1.6% weekly gain was just too large to be valid.
Still, investors could use its recent trading range as an alternate entry within the broader consolidation. The buy point is 545.84.
UnitedHealth ranks fourth in terms of leadership for the Medical and Managed Care Group, according to the IBD Stock Checkup. UNH stock has a 93 Composite Rating out of a possible 99. The Composite Rating combines a number of key technical indicators into one easy to read score. It has a strong 90 EPS Rating, having posted positive earnings growth for four consecutive quarters. And sales growth has steadily ranged from 11% to 15% over the last five quarters. UNH stock has an RS Rating of 91, indicating strong stock price performance against its peers in the S&P 500 over the past year.
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