Managed Care Industry Outperforms Market, Part Of Health Care Sector Holding Up

Despite market weakness, one of the industries holding up particularly well has been IBD’s Medical-Managed Care group, currently ranked No. 28 out of 197 industries.


Outperformance has been in part due to the defensive nature of the health care sector, a necessity regardless of economic conditions. Yet, growth has also been strong with the industry posting years of double-digit sales growth.

This strong growth is expected to continue this year, with analysts polled by FactSet projecting sales growth of 10.4% for the industry. Companies in the industry have been able to translate increased revenue into profits, with earnings growth this year projected at 16.4%.

The S&P health care sector held up better in June, down 3%. Here are some of the leaders in the group with noteworthy price charts.

Top Ranked Humana Clears Buy Point

After clearing a 469.44 buy point Humana (HUM) has been consolidating around that level. The relative strength line is at new highs, a good sign. The stock is ranked No. 1 in the Medical-Managed Care group with an IBD Composite Rating of 98.

Humana has been growing profits steadily. After reporting earnings of $20.63 last year, EPS is expected to grow to $24.65 and $27.64 in 2022 and 2023, respectively. Humana had strong first-quarter results in April, when the company reported EPS of $8.04 and sales of $23.9 billion.

The company also raised its forward guidance and reaffirmed a 150,000-200,000 membership growth rate for this year. Humana will report second-quarter earnings on July 27. Analysts expect EPS of $7.67 with sales of $23.4 billion.

Elevance Health (ELV) shares the top spot in the group with Humana, also boasting an IBD Composite Rating of 98. The stock is forming a double-bottom base, though it remains a fair distance below a 521.62 buy point. It’s also below the 50-day moving average.

UnitedHealth Group (UNH) hit a 507.35 buy point from a double bottom earlier in the week. Shares have since consolidated around that level.

The largest stock in the group by market cap, UnitedHealth will provide a good sense of how the industry is faring as a whole when it reports its second-quarter results on July 15. Analysts are expecting earnings of $5.21 a share on sales of $79.7 billion.

Other Managed Care Stocks Aiding Health Care Sector

While some of the other stocks in the group are displaying weakness, there are a few more names with strong chart patterns. Centene (CNC) currently ranks third in the group with a Composite Rating of 97. The stock is forming a double bottom with an 87.44 buy point. Cigna (CI) — ranked fifth in the group — is forming a narrow base with a 273.67 buy point.


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