UnitedHealth at All-Time High After Strong Quarter

Dow component UnitedHealth Group Inc. (UNH) is trading at an all-time high on Thursday after beating Q1 2021 top and bottom line estimates. America’s largest publicly-held health care provider benefited from its enormous Medicare/Medicaid administration footprint, posting a profit of $5.31 per-share, $0.94 better than expectations. Revenue rose a healthy 9.0% year-over-year to $70.2 billion, beating consensus by more than $1 billion. The stock currently pays a 1.33% annual dividend.

COVID Still Impacting Profits

The company also raised fiscal year 2021 earnings-per-share (EPS) guidance from $17.75 – 18.25 to $18.10 – 18.60. Those estimates include an approximately $1.80 per-share charge for the “potential net unfavorable impact to accommodate continuing COVID-19 effects, such as: testing and treatment costs; the residual impact of people having deferred care in 2020; and unemployment and other economy-driven factors”. UnitedHealth now serves 49.5 million customers, or more than 15% of the U.S. population.

The earnings report included a cautionary statement about the pandemic-driven profit deferral, noting that “COVID-19 treatment and testing during the quarter was higher than expected, paired with higher elective care deferral patterns. UnitedHealth Group is focused on encouraging and helping people to obtain the care they need, including vaccinations, and expects a continued rise in provision of care as the year progresses.”

Wall Street and Technical Outlook

Wall Street consensus hasn’t budged so far in 2021, maintaining an ‘Overweight’ rating based upon 28 ‘Buy’, 1 ‘Overweight’, and 6 Hold recommendations. Price targets currently range from a low of $360 to a Street-high $462 while the stock is set to open Thursday’s session more than $25 below the median $409 target.  This humble placement could support a rapid advance above 400 in coming sessions.

UnitedHealth failed a breakout above 2018 resistance in the 280s during 2020’s pandemic decline and bounced strongly, hitting new highs in June. Channeled price action stalled near 370 in November, giving way to a modest correction that found support at the 200-day moving average in February 2021. The stock bounced to range resistance in March and broke out once again, targeting an advance that that could reach 450 in the second half of the year.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.