MarketsMuse blog update profiles the largest US health insurer’s stellar first-quarter and the effects it has on the market with ETFs such as iShares U.S. Healthcare Providers ETF (NYSEARCA: IHF) receiving a huge boost from the insurer. This MarketsMuse update is courtesy of SeekingAlpha’s article from Zacks Funds, “Play UnitedHealth Q1 Strength With This Health Care ETF” with excerpts from the article below.
The largest U.S. health insurer UnitedHealth Group (NYSE:UNH) reported blockbuster first-quarter 2015 results. It topped our estimates on both the top and the bottom lines as well as raised its full-year outlook.
UnitedHealth Q1 Results in Focus
Earnings per share came in at $1.46, well above the Zacks Consensus Estimate of $1.33 and 32.7% better than the year-ago earnings. Revenues rose 13% year over year to $35.76 billion, edging past the Zacks Consensus Estimate of $34.73 billion. The robust performance was driven by rising enrollments and strength in the Optum Health Services business.
Market Impact
The market has welcomed UNH’s earnings beat and its strong outlook. Shares of UNH jumped as much as 4.3% following its earnings announcement on elevated volumes, making it the biggest percentage gainer on the Dow Jones Industrial Average Index for the day.
Since UnitedHealth is the first insurer to report earnings and a bellwether, the result has spread optimism across the broad health insurance sector with stocks of other players in the space in green at the close on the day. Some of these players include Aetna (NYSE:AET) – up 3.2%, Anthem (NYSE:ANTM) – up 2.4%, Cigna (NYSE:CI) – up 2% and Humana (NYSE:HUM) – up 0.5%.
Given UnitedHealth’s strength to lift the health insurer corner of the broad health care space and the solid run up in its share price, one ETF – iShares U.S. Healthcare Providers ETF (NYSEARCA:IHF) – could be worth a look for investors seeking to ride out the recent surge. It has the largest allocation to this big giant and looks to be in focus in the coming days with room for upside.
Bottom Line
UNH’s earnings beat sent the stock higher on the day, thus becoming the cornerstone for other stocks in the space. A merger and acquisition frenzy and encouraging industry trends bode well for the health insurer stocks and the related ETFs.
Other ETFs like Health Care Select Sector SPDR Fund (NYSEARCA:XLV),Vanguard Health Care ETF (NYSEARCA:VHT), iShares U.S. Healthcare ETF (NYSEARCA:IYH) and Fidelity MSCI Health Care Index ETF (NYSEARCA:FHLC) also have a decent exposure to UnitedHealth in the range of 3-4%. These funds also have the potential to move higher on UNH strength in the coming days but with less momentum.
To read the entire article on health care ETFs from SeekingAlpha, click here.
