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Why UnitedHealth Is Missing the Dow's Healthy Gains

Once again, the Dow Jones Industrials (DJINDICES: ^DJI  ) has vaulted above the 14,000 level, coming back from the long holiday weekend with some optimism about the market's future prospects. Major news sources are pointing to renewed expectations for more merger and acquisition activity as the reason for the advance, as low interest rates and income-hungry bond investors make it easier than ever for companies to get the financing they need to make buyout deals. By 10:45 a.m. EST, the Dow was up 47 points to 14,028, and broader market measures were up almost half a percent.

Nowhere is the M&A trend more obvious than in the office retail space, where Office Depot (NASDAQ: ODP  ) and OfficeMax soared 14% and 27%, respectively, following reports that the two companies are in talks to merge. Surprisingly, Staples (NASDAQ: SPLS  ) , which arguably has the most to lose if its rivals combine forces, is also up in the double digits this morning. The potential positives and cost-savings of an Office Depot-OfficeMax merger are obvious, but Staples also stands to benefit if the move results in a less cutthroat competitive environment that allows the survivors to make their business models more efficient.

UnitedHealth (NYSE: UNH  ) , on the other hand, has fallen 2.4% since Humana announced that the federal government's proposed Medicare Advantage payment rates for 2014 would hurt profit margins substantially for the segment. If those rates become final, UnitedHealth may have to scale back its private-insurance offerings to Medicare recipients, which represent a significant part of the insurance carrier's business and could have a material impact on revenue.

Finally, Melco Crown (NASDAQ: MPEL  ) fell nearly 7% as analyst firm Sterne Agee said that growth in gross gaming revenue in Macau could rise much less than expected this month, with a traditional cooling-off period following Chinese New Year celebrations holding back the market. Even more so than U.S.-based gaming companies that have expanded into Asia, Melco is vulnerable to threats of a slowdown in Macau due to its near-complete focus on region.

Will UnitedHealth bounce back?
To learn more about UnitedHealth's prospects for this year, next year, and beyond, be sure to check out our premium research report on the health insurance company. Inside, you'll learn all about how UnitedHealth is dealing with the post-Obamacare world, and you'll also get a full year of analyst updates to keep you covered as key news develops. Don't miss out; simply click here now to claim your copy today.

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Related Tickers

9/23/2016 4:55 PM
^DJI $18261.45 Down -131.01 -0.71%
MPEL $15.86 Up +0.21 +1.34%
Melco Crown Entert… CAPS Rating: *****
ODP $3.71 Up +0.08 +2.20%
Office Depot CAPS Rating: *
SPLS $8.54 Down -0.01 -0.12%
Staples CAPS Rating: **
UNH $140.51 Down -0.53 -0.38%
UnitedHealth Group CAPS Rating: ****