UnitedHealth (UNH) fell Monday after the insurer forecast that earnings next year would come in below analyst expectations.
Analysts had been expecting to see UnitedHealth earn $5.60 a share next year, but today the company said that it now expects to earn just $5.25 to $5.50. The stock is down 1.8% on the forecast, but it really should not have come as too big of a surprise since the company commented last month that estimates for next year were too high.
The company blames the weak economy and government efforts to reign in the deficit.
A big uncertainty for the company is what actions the government is going to take to avoid the “fiscal cliff” that the nation is now facing. As it stands, we expect to see big spending cuts, and these cuts could have a serious impact on UnitedHealth’s government revenues.
UnitedHealth saw a surge in enrollments for Medicaid and Medicare this year, and those programs are likely targets for cuts next year.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.