I've been watching UNH closely ever since its big guidance upgrade on the last earnings report. The stock chose that moment to start tanking, and it's been tanking ever since. Hopefully the market has now had enough of this down trend and is ready for the stock to recover.
Zacks, one of the best-performing analytics firms, upgraded UNH today to a buy. It's got an 8.3/10 Equity StarMine Summary score. UNH also flashed a buy signal a few days ago on the reverse RSI indicator, and it's in oversold territory on the daily stochastic. There's strong support from volume in the 220-228 range, so this is a good range to buy. Below 220, we could fall to 212 or 200.
What are your thoughts on UNH after todays performance? Really appreciate your input!
ChristopherCarrollSmith
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@Vitekx, UNH has a nice valuation, but there are two risks here. First, it could eat a lot of insurance costs from coronavirus if that becomes a pandemic and hits the US. And second, the stock will drop if it looks like Elizabeth Warren or Bernie Sanders might beat Donald Trump in the election. Personally I am waiting till after the election to play anything healthcare or pharmaceutical.
RedToGreen
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can we still enter calls per this TA?
ChristopherCarrollSmith
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@RedToGreen, This is a less optimal entry point. A day after upgrading the stock to Buy, Zacks downgraded it back to Hold. We're also seeing some hesitation on the stochastic, so I don't know whether the stock will move up or down from here. But UNH is still in the green buy zone on its RSI channel, it's still got a fantastic 9/10 Equity StarMine Summary score, and it's got earnings coming next month for a possible upward catalyst. This is not a bad entry, it's just not quite as good as when I originally posted.
Note that the healthcare industry continues to face both election-year regulatory risk (with Democrats trying to make healthcare reform a major plank of their platform) and disruptive competition. UNH is a useful and financially healthy company to add some diversity to your portfolio, especially at this discounted price, but it should probably be underweight due to the risks the industry faces.