UnitedHealth Stock Drops After Talks of Startup Acquisition

The equity is up over 31% year-over-year, however

Digital Content Manager
Sep 24, 2020 at 11:27 AM
facebook twitter linkedin


The shares of UnitedHealth Group Inc (NYSE: UNH) are down 0.3% at $291.34 at last check, after Bloomberg reported the health care company is in advanced talks to acquire pharmacy startup DivvyDose for about $300 million, according to sources familiar with the matter. Though the deal is not finalized, the move comes as health insurers attempt to diversify their business with initiatives such as care delivery and pharmacy benefits, as pressure to lower medical costs builds. 

The security has experienced its fair shares of ups and downs this year. And though the shares have managed to recover from their mid-March, three-year lows near the $187 mark to reach an all-time high of $324.57 on August 11, the stock has been cooling off since then. Now, shares are slipping below the once supportive 80-day moving average, with resistance forming at the $300 mark. Nonetheless, UNH still sports a 31.8% year-over-year lead.

Analysts are overwhelmingly optimistic towards UNH, with 16 of the 18 in coverage sporting a "buy" or better rating, and only two carrying a tepid "hold." Plus, the 12-month consensus target price of $345.36 is a hefty 18.7% premium to current levels.

The options pits tell a more pessimistic story. UnitedHealth stock's 50-day put/call volume ratio of 0.81 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE) NASDAQ OMX PHLX (PHLX) stands in the elevated 96th percentile of its annual range, suggesting a healthier-than-usual appetite for long puts of late. 

Echoing this is UNH's Schaeffer's put/call open interest ratio (SOIR) of 1.16, which stands higher than 89% of readings from the past year. This implies short-term option traders have rarely been more put-biased.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners