by Ian Harvey
October 20, 2019
UnitedHealth Group smashed earnings estimates last week and continued to sail upwards.
On October 14, Stock Options Made Easy advised “Earnings Predictions” members to execute a call options trade which provided potential profits of 369%.
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Dow Jones component UNH, the nation's largest insurer, reported third-quarter earnings early Tuesday that easily topped Wall Street expectations.
UnitedHealth earnings rose 14% to $3.88 a share exceeding analysts’ estimates of 10% to $3.75. As well, revenue climbed 6.7% to $60.35 billion, again, exceeding analysts’ estimates of 5.4% to $59.62 billion.
UNH also raised 2019 guidance for adjusted EPS to a range of $14.90-$15.00 vs. prior guidance of $14.70-$14.90, up 15 cents at the midpoint. Before UnitedHealth's 13-cents Q3 beat, analysts expected full-year UnitedHealth earnings per share of $14.84.
Shares soared 8.2% to $238.59 in Tuesday's stock market trading. UnitedHealth stock reclaimed its 50-day line.
UnitedHealth stock has slumped 23% since hitting an all-time high of 287.94 last December.
The stock continued to climb throughout the week despite Friday’s sell-off, finishing at $245.34.
The Recommended Trade on Royal Bank of Scotland.....
UnitedHealth Group Inc. (NYSE:UNH), a leader in health
insurance for years, will report earnings before the market opens. The
consensus earnings estimate is $3.75 per share on revenue of $59.96 billion;
but the Whisper number is higher at $3.83 per share.
Consensus estimates are for year-over-year earnings growth of 9.97% with
revenue increasing by 6.02%.
For the last reported quarter, it was expected that UnitedHealth would
post earnings of $3.46 per share when it actually produced earnings of $3.60,
delivering a surprise of +4.05%.
Higher revenues, strength in both segments — UnitedHealthcare and Optum
— and membership growth led to the outperformance.
Over the last four quarters, the company has beaten consensus EPS estimates
Within the UnitedHealthcare segment in the quarter to be reported,
fee-based commercial group business is likely to have increased, primarily
owing to an acquisition.....
The Recommended Option Trade: Buy the UNH OCT 18 2019 222.500 CALL at approximately $4.60.
This resulted in a 369% potential profit for our position!
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It is very unlikely that plans that would wipe out commercial insurance will pass — even if Democrats take the White House and Senate.
UnitedHealth has about 27 million commercial insurance members out of a total of about 50 million.
UnitedHealthcare, the company's managed-care division, has seen growth driven by an expansion of its Medicare Advantage. In Q3, Medicare Advantage customers rose nearly 450,000 from a year ago.
Following a strong third-quarter 2019 performance, UnitedHealth raised its 2019 adjusted earnings per share guidance to $14.90-$15 from $14.7-14.9 guided earlier.
Where to now?
While UnitedHealth has underperformed the market so far this year, but seems to be now on track to recover much of the ground it had previously lost.
UnitedHealth’s vast and diversified business operations, spanning from health benefit to health services, and a number of accretive acquisitions that have driven its performance over the years, will be the growth catalysts this year too.
As well, a solid balance sheet will enable acquisitions that should drive inorganic growth.
Where to now for UnitedHealth Group?
Will we recommend another options trade on UnitedHealth Group?
What will “Stock Options Made Easy” advise members to do?
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!