Scalper1 News
The largest U.S. health insurer, UnitedHealth Group (NYSE: UNH ), reported solid first-quarter 2016 results. The company continued its long streak of earnings beats. Earnings per share came in at $1.81, surpassing the Zacks Consensus Estimate by 9 cents and the year-ago earnings by 17%. Revenues rose 25% year over year to $44.5 billion, broadly in line with the Zacks Consensus Estimate of $44.7 billion. The company reported medical care ratio of 81.7%, up 30 basis points year over year, thanks to the extra calendar day of service in the quarter. Growth was broad based, with a 54% increase in revenues for Optum, the health services business (see all the Healthcare ETFs here ). Based on solid first-quarter results and business trends, UnitedHealth raised its earnings guidance to $7.75-7.90 per share for 2016 from $7.60-7.80 per share projected earlier. The Zacks Consensus Estimate of $7.85 per share is within the guided range. The company expects revenues to be approximately $182 billion in 2016, which is in line with the current Zacks Consensus Estimate. As a result, the stock jumped 4.8% in the last two trading days (as of April 20, 2016), following the earnings announcement. The stock currently has a Zacks Rank #2 (Buy) with a Value Style Score of “A”. This underscores its potential to outperform in the weeks ahead. In its conference call, UnitedHealth stated that it would pull out of the majority of public exchanges owing to smaller overall market size and a higher risk profile within this market segment. Next year, the company plans to remain in only a few of the states and will not carry any financial exposure from the exchanges into 2017. ETFs in Focus Investors may want to take a closer look at the ETFs having the largest allocation to this health insurance giant, as UNH has shown encouraging trading following its earnings. For those, the iShares U.S. Healthcare Providers ETF (NYSEARCA: IHF ) could especially be on their radar, as UNH takes the top spot in the fund’s portfolio at 12.9% share. IHF This ETF provides exposure to 49 companies offering health insurance, diagnostics and specialized treatment by tracking the Dow Jones U.S. Select Healthcare Providers Index. About 45% of the portfolio is dominated by managed care firms, while healthcare services (26.5%) and healthcare facilities (23.3%) round off the top three. The fund has amassed $709.6 million in its asset base, while volume is good at about 112,000 shares per day, on average. It charges 44 bps in annual fees and expenses, and added 1.9% in the last two trading days following the UNH earnings release (as of April 20, 2016). The product has a Zacks ETF Rank of 1 or “Strong Buy” rating with a Medium risk outlook. Other ETFs Other healthcare ETFs, like the Health Care Select Sector SPDR ETF (NYSEARCA: XLV ) – 4.6%, the iShares U.S. Healthcare ETF (NYSEARCA: IYH ) – 4.3%, the PowerShares DWA Healthcare Momentum Portfolio ETF (NYSEARCA: PTH ) – 3.8%, the Fidelity MSCI Health Care Index ETF (NYSEARCA: FHLC ) – 3.9% and the Vanguard Health Care ETF (NYSEARCA: VHT ) – 4.1%, also have a decent exposure to UnitedHealth. Apart from the healthcare space, UNH is among the top 10 holdings in some large cap ETFs, such as the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) and the PowerShares Dynamic Large Cap Growth Portfolio ETF (NYSEARCA: PWB ), with exposure of 4.9% and 3.4%, respectively. However, these products will be less impacted by the movement of UNH share price. Original Post Scalper1 News
Scalper1 News