Market Overview

Health Insurance Stocks Soar As Sector Avoids Worst-Case Election Scenario

Health Insurance Stocks Soar As Sector Avoids Worst-Case Election Scenario

Votes are still being counted in the U.S. presidential election, but health care facility and managed care stocks appear to have avoided a worst-case scenario. 

No Blue Wave: On Wednesday, BofA Securities analyst Kevin Fischbeck said the fact that Democrats appear unlikely to have secured a Senate majority makes the possibility of significant health care reform unlikely.

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“We see a split Congress/slim majority as a positive scenario for Managed Care and Healthcare facilities as broad, sweeping changes like implementing a public option, raising taxes or lowering the Medicare age are likely off the table, increasing visibility for at least another two years,” the analyst said in a note. 

Stocks On The Move: As a result, Fischbeck said health care facility and managed care stocks likely have near-term upside, led by Humana Inc (NYSE: HUM) and UnitedHealth Group Inc (NYSE: UNH).

Humana shares were up 6.3% at last check Wednesday and UnitedHealth shares were up 10.87%. 

When it comes to the presidential race — which could be headed for recounts and/or court challenges — Fischbeck said a Donald Trump victory would represent the status quo in the health care sector and would be a positive for investors.

Yet a Joe Biden victory and a split Congress would also be bullish, the analyst said.

While Biden would likely be able to do things to shore up and fund the Affordable Care Act, he will likely not be able to make any sweeping reforms without support from the Senate, according to BofA. 

In addition to the big moves in Humana and UnitedHeath, shares of Anthem Inc (NYSE: ANTM) were up 9.3% and shares of Cigna Corp (NYSE: CI) were up 12.55% Wednesday. 

Benzinga’s Take: It appears health care facility and managed care stocks were pricing in a high likelihood of a blue wave victory for Democrats, an outcome that appears unlikely at this point.

Gridlock in Washington limits the possibility of disruptive health care reforms that could potentially eat into earnings and limit long-term visibility.


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