Healthcare Giant Outperforms: A Healthy Dose of Market Resilience

Key Points

• UNH has outperformed the overall market, with shares up nearly 10% in the last month.
• The stock recently broke through critical resistance and now finds support at $513, possibly aiming for $540.
• The company is reporting earnings on October 13, 2023.

Over the last month, the overall market has experienced significant selling amid increased uncertainty. The S&P 500 ETF Trust NYSE: SPY has traded almost 5.5% lower in that period, and wherever you look, it might seem that nothing has managed to buck the trend. 

However, that’s not the case. The healthcare giant UnitedHealth Group NYSE: UNH has been a standout performer, especially in terms of relative strength, over the last month. Over the previous month, shares of UNH have surged almost 10% higher despite the overall selling seen in the market. 

Why does this matter? Well, stocks with relative strength to the overall market are likely to continue higher even after the market reverses. So, taking a closer look at UNH is worthwhile as the recent price action points to continued momentum. 

UnitedHealth Group NYSE: UNH

UnitedHealth Group is a prominent healthcare company in the United States, operating globally in four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. It ranks as the 7th largest company globally by revenue and is the largest insurer based on annual premiums. It holds the 11th position on the Forbes Fortune 500 list and boasts a market capitalization of about $484 billion. In 2022, its total revenue exceeded $320 billion.

UNH currently has a P/E ratio of 23.38 and trades near the high end of its 52-week range of $445.68 - $558.10. The company pays a meaningful dividend of 1.44%, higher than the bottom 25% of all stocks that pay dividends. UNH has steadily increased its dividends over the previous 14 years and has a dividend payout ratio of 33.65%.

UNH Recent Performance

Shares of UNH have significantly outperformed the market in recent weeks and now find itself up over 8% already in October. Notably, the stock recently broke above a critical resistance level, around $513. Previously, this level had been tested multiple times in July, and on the many occasions that the stock traded into it, it failed to hold above. 

However, that all changed last week, and the stock has now firmly turned that area of resistance into newfound support. If the stock can continue to base above the previous resistance, a move toward April’s high might be achieved as early as next week. Afterward, $540 becomes a reasonable target.

Whether the stock can continue outperforming the market will largely depend on its earnings, which will be released on Friday. 

UNH is a Top Rated Stock

UNH is on the Top-Rated Stocks list, a list of the 100 companies that have received the highest average rating among analysts in the last twelve months. 

The company currently has a consensus analyst rating of Moderate Buy based on sixteen ratings. Of the sixteen, one is a Strong Buy, thirteen have UNH as a Buy and two at Hold. Notably, the consensus price target for UNH predicts over 10% upside. 

UNH Set to Report Earnings on Friday

UNH shared its latest earnings on July 14, 2023. They reported earnings of $6.14 per share for the quarter, surpassing expectations by $0.22. The company's quarterly revenue was $92.90 billion, higher than the expected $90.97 billion, marking a 15.6% increase compared to the same period last year.

The next quarterly earnings report from UnitedHealth Group is scheduled for October 13, 2023, with an earnings conference call at 8:45 AM Eastern on the same day. They anticipate a 12.28% growth in earnings for the coming year, from $24.83 to $27.88 per share.