Beat-and-Raise Boosts UnitedHealth Stock

Cantor Fitzgerald called UNH's guidance "notable"

Apr 16, 2019 at 10:22 AM
facebook twitter linkedin


UnitedHealth Group Inc (NYSE:UNH) stock is near the top of the Dow this morning, after the largest U.S. health insurer reported stronger-than-expected adjusted first-quarter profit of $3.73 per share and revenue of $60.31 billion. UNH also boosted its full-year profit forecast, thanks to higher prescription volumes at its pharmacy benefits business.

Early analyst reaction has been mostly upbeat. Cantor Fitzgerald reiterated its "overweight" rating and $310 price target, calling UnitedHealth's upwardly revised forecast "notable," considering the company "has historically been conservative in adjusting guidance early in the year." Evercore ISI, meanwhile, said UNH's fundamentals are strong, but questioned "whether any rebound in the shares can be sustained amid the political overhang that has plagued the managed care group."

In fact, concerns over potential legislative action against the sector -- including a possible change to the drug-rebate system -- sent UNH stock tumbling 10.3% last week. The shares bottomed at an annual low of $220.82 on Friday, but have since bounced 7.4% -- including today's 3.1% gain to trade at $237.23. Year-to-date, the equity is down 4.7%.

UNH options volume is running out out of the gate, with 14,200 calls and 4,850 puts on the tape already, compared to an average daily volume of 18,000 contracts. The June 260 call is most active, while new positions are being initiated at the April 235 call.

Meanwhile, in the wake of earnings, short-term implied volatilities have imploded. Most recently, UNH stock's 30-day implied volatility had plunged 15.9% to 28.2%, though this still registers in the 92nd annual percentile.

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners