Dow Jones News: UnitedHealth Boosts Profits; Apple Price Target Raised on 5G Optimism

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With the first phase of a trade deal between the U.S. and China set to be signed today, the Dow Jones Industrial Average (DJINDICES: ^DJI) reacted by rising sharply. The Dow was up 0.5% at 11:20 a.m. EST.

Contributing to that gain was UnitedHealth Group (NYSE: UNH), which reported strong earnings growth that beat analyst expectations. Shares of Apple (NASDAQ: AAPL) were also on the rise following a price target increase from an analyst optimistic about the tech giant’s growth prospects.

Profits improve for UnitedHealth

Health insurance giant UnitedHealth reported mixed fourth-quarter results Wednesday morning, with revenue coming in short of analyst expectations. But an earnings beat driven by improving margins was enough good news to drive the stock 2.4% higher in morning trading.

Image source: UnitedHealth.

UnitedHealth reported fourth-quarter revenue of $60.9 billion, up 4.2% year over year but $270 million below the average analyst estimate. The UnitedHealthcare business generated revenue of $48.2 billion, up 4.3%, while the Optum health services business generated revenue of $29.8 billion, up 8%.

Non-GAAP (adjusted) earnings per share came in at $3.90, up from $3.28 in the prior-year period and $0.12 higher than analysts were expecting. Operating margin in both segments improved. UnitedHealthcare registered an operating margin of 4.3%, up 40 basis points year over year, while Optum boosted its operating margin by 30 basis points to 10.1%.

On top of reporting earnings growth, UnitedHealth reiterated its previously issued guidance for 2020. The company expects GAAP earnings per share between $15.45 and $15.75, along with non-GAAP earnings per share between $16.25 and $16.55.

Shares of UnitedHealth spent much of 2019 in the doldrums, but began to recover sharply toward the end of the year. The healthcare stock is now up more than 33% over the past three months.

Analysts take sides on Apple

As Apple gears up to launch a 5G-enabled iPhone later this year, analysts are largely lining up on the bullish side. That probably has something to do with the stock’s recent performance. Shares of Apple gained 85% in 2019, and they’re off to a strong start in 2020.

Another analyst jumped on the Apple train Wednesday morning, helping to push the stock up about 0.5%. Canaccord Genuity already had a buy rating on Apple stock, which it reiterated. Canaccord also boosted its price target from $275 to $355.

There were a few reasons for the price target bump. First, the expectation that 5G will drive a strong upgrade cycle later this year and into 2021. Second, the possibility of Apple launching a low-cost iPhone this year, replacing the iPhone SE. And third, continued growth in the services and wearables businesses.

There are still some analysts who don’t share the same rosy view. On Tuesday, Atlantic Equities downgraded Apple from neutral to underweight, lowering its price target from $275 to $235. The rationale: Consumer demand for 5G is unclear, 5G costs could pressure margins, and services and wearables are unlikely to have much of an impact on Apple’s financials.

Investors will have a good idea which of these analyst camps are right when Apple reports its fiscal first-quarter results on Jan. 28.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.