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UnitedHealth Shares Finding Their Mojo Again

Investing.com - UnitedHealth Group (NYSE:UNH) has been a big reason why the Dow has held its own lately.

The world's largest health-insurance company was the Dow's best performer last week, up 6.73% adding 108 points to the index by itself. It was up another 1% today.

UnitedHealth's rebound came after falling 3.6% two weeks ago in a crummy week for stocks generally. The Dow, S&P 500 and Nasdaq Composite all fell for five-straight days.

The UnitedHealth rally is part of the easing of recent selling pressure on health stocks generally.

The Health Care Select Sector SPDR (NYSE:XLV) ETF was up 1.7% last week after falling 3.8% the week before. UnitedHealth represents nearly 7% of the Health Care ETFs assets, third-largest after Johnson & Johnson (NYSE:JNJ) and Pfizer (NYSE:PFE).

The selling in health stocks seemed prompted by investor panic over the push by Democrats on health-care-for-all plans. But many analysts noted that, even if a plan was passed by the House of Representatives, it would face intense industry opposition, with UnitedHealth a big leader, and will get nowhere in a GOP-ruled Senate.

The company serves some 115 million customers with its various coverage plans. In addition, it has a large pharmacy benefit management business that negotiates substantial rebates from drug companies and passes the rebates on to customers.

Analysts love the stock.

Twenty-four of 25 analysts tracked by Investing.com rate UnitedHealth a buy. The consensus is that the stock could top $307 in the next 12 months, a 22% gain from current levels. Technical measures also tracked by Investing.com rate the stock a strong buy.

UnitedHealth has been a star performer among the 30 Dow stocks in recent years as earnings and revenue routinely beat estimates. In 2017, it soared nearly 38%. In 2018, the stock rose just 13%, but that included a 6.4% drubbing in last fall's selloff.

An aging population is a big reason health insurance stocks have been strong in recent years. Add to that the ability to add acquisitions to complement their core offerings.

Critics say their premiums are rising too fast and operating pharmacy benefit plans just adds to the companies' bottom lines at the expense of consumers.

UnitedHealth made a stab at addressing that issue last week. It said Tuesday that, starting in 2020, new corporate customers will have to pass their drug rebates on to consumers.

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