Trade UnitedHealth Group as Q2 Earnings Beat

July 27, 2022 12:04

In times of economic uncertainty and turbulence, investors tend to readjust their portfolios, rotating out of more risky, cyclical stocks and favouring historically resilient sectors.

These defensive sectors are made up of industries which can always rely on a consistent level of demand: consumer goods, utilities and healthcare are the main three which usually spring to mind.

UnitedHealth Group, as the name suggests, operates in the latter of these three industries and is the second largest healthcare company in the world by revenue. They recently reported second quarter results which beat expectations, causing share price to pop by more than 5% the following session. Learn how to trade the stock below.

Stock: UnitedHealth Group
Symbol for Invest.MT5 Account: UNH
Date of Idea: 26 July 2022
Time Line: 6 - 12 months
Entry Level: $535
Target Level: $585
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Therefore, you should never invest more than you can afford. Start small to understand your own risk tolerance levels or practice on a demo account first to build up your knowledge before investing.

Why Trade UnitedHealth Group Stock?

With high inflation, rising interest rates and slowing economic growth, the economic outlook remains uncertain, and many stocks are suffering as a result.

Healthcare is a defensive industry, which can usually rely on a constant level of demand regardless of what is happening in the wider economy. This is particularly true of health insurance companies; because, if people stopped paying their premiums, they would lose their health insurance.

Consequently, the downturn we have observed in the stock market this year has been less severe to the healthcare industry. For example, whilst, at the time of writing, the wider S&P 500 has fallen 17.7% year to date, the S&P 500 Health Care Index – composed solely of the healthcare stocks on the S&P 500 – has fallen just 7%.

UnitedHealth shares have gained 5.4% so far in 2022, one of less than 100 stocks in the S&P 500 which have posted gains year to date.

UnitedHealth is a US multinational healthcare and insurance company, which is not only the second largest healthcare company in the world in terms of revenue, but also the eighth largest company in the world by this metric. In 2021, almost 80% of the company’s revenue was generated by premiums

On 15 July, UnitedHealth Group released their second quarter earnings which beat expectations. Revenue increased 13% year on year, reported at $80.3 billion for the quarter vs an expected $73.68 billion. Likewise, earnings per share were reported at $5.57 vs an anticipated $5.21, after earnings from operations soared 19% year on year.

These positive results led UnitedHealth to increase their full-year net earnings forecast to between $21.40 and $21.90 per share, up from between $20.45 and $20.95 per share.

However, despite the mostly positive results, the company warned about the recent rise in hospitalisations due to Covid-19, but that its outlook had accounted for the uncertainty surrounding this issue.

UnitedHealth Stock Forecast - What do the Analysts Say?

According to analysts polled by TipRanks for a UnitedHealth stock forecast in the past 3 months, there are currently 12 buy, 4 hold and 0 sell ratings on the stock. The highest price level for a UnitedHealth stock forecast is $650 with the lowest price target at $513.

The average price target for a UnitedHealth stock forecast is $587.38 which represents more than 10% upside from current levels, at the time of writing.

Source: TipRanks - 26 July 2022

An Example Trading Idea for the UnitedHealth Stock Price

An example trading idea for the UnitedHealth share price could be as follows: 

  • Buy the stock on a break above $535 to allow for current market volatility.
  • Target just below the average analyst price target at $585.
  • Keep your risk small at a maximum of 5% of your total account.
  • Timeline = 6 – 12 months
  • If you buy 10 UnitedHealth shares:
    • o If target is reached = $500 potential profit ($585 - $535 *10 shares).

It’s important to remember that the share price is unlikely to go up in a straight line and it may even go much further down before it rises, if it rises at all. This is especially true at the moment considering the level of uncertainty and volatility in global stock markets. 

Therefore, be sure to exercise good risk management, which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and what the risks involved are. 

Another factor to consider is the commission, which can eat into your profits. With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share. This means buying 10 shares in UnitedHealth stock would result in a commission of $0.20 ($0.02 * 10 shares). 

However, there is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!

How to Buy UnitedHealth Stock in 4 Steps 

With Admirals, you can buy shares in over 4,300 companies, including UnitedHealth with a low commission of just $0.02 per share and a minimum transaction fee of just $1 on US stocks.

  • Open an Invest.MT5 account with Admirals to access the Trader’s Room.
  • Click ‘Invest’ next to one of your live or demo accounts to open the web platform.
  • Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.
  • Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Source: Admirals MetaTrader WebTrader – UnitedHealth Group Daily Chart – New Order. Date Captured: 26 July 2022. Past performance is not a reliable indicator of future results.

Click on the banner below to buy UnitedHealth stock today! ▼▼▼

Do You See the UnitedHealth Stock Price Moving Differently?  

Remember that all analytics and trading ideas are based on the personal view and experience of the author. 

If you believe there is a higher chance UnitedHealth's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide. 

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks using CFDs.

This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in our ‘How to Trade CFDs’ article.


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Roberto Rivero
Roberto Rivero Financial Writer, Admirals, London

Roberto spent 11 years designing trading and decision-making systems for traders and fund managers and a further 13 years at S&P, working with professional investors. He has a BSc in Economics and an MBA and has been an active investor since the mid-1990s