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] and UnitedHealth [UNH
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] climbed Thursday, after the President’s primetime speech on health care. Do fewer surprises lie ahead for the space?From the market action on Thursday it appears the Street thinks the worst is over for health care stocks. In fact, following the speech, many analysts predicted changes to the system would be moderate, at best.
"There wasn't anything Obama said that is drastically changing the outlook as to what might come out of Congress," said Steve Shubitz, an analyst with Edward Jones.
Although Obama "demonized insurers several times, he didn't add anything new to the debate," Wells Fargo analyst Matt Perry said in a research note. "Overall we view the speech as neutral to insurers."
Even the possibility of a threatening public health plan also now sees doubtful, analysts said although a public option is not off the table.
On Friday’s Fast Money, Citi analyst Charles Boorady told the desk the legislation made him long term bullish on health care because the net result should be more coverage for more people.
And he may be right.
"Under my plan, individuals will be required to carry basic health insurance - just as most states require you to carry auto insurance. Likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers," the President said.
All things considered, what’s the health care trade, now?
Overall I think reform means volumes go up but profit margins go down, Boorady explains on Thursday’s show. As a result I like companies that benefit from increased volumes but are less likely to suffer from smaller margins. That’s companies such as McKesson [MCK
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] or Medco [MHS
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].
And I’d also recommend long positions in both UnitedHealth [UNH
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] and Aetna [AET
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], says Boorady. It seems the stocks have priced in something much worse than will actually come to pass.
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Trader disclosure: On Sept. 10th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (AAPL) & Short (AAPL) Calls; Najarian Owns (BAC) & Short (BAC) Calls: Najarian OWns (C) Calls: Najarian Owns (FCX), Owns (FCX) Put, Is Short (FCX) Calls; Najarian Owns (JPM) & Is Short (JPM) Calls; Najarian Owns (JOYG) & Short (JOYG) Calls; Najarian Owns (MS) And Is Short (MS) Call; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (MOS) Call Spread; Najarian Owns (PALM) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (TEVA); Najarian Owns (V) & Short (V) Calls; Najarian Owns (YHOO) Calls; J Najarian Owns (AAPL), (BAC), (C), (BX), (ESLR), (GS), (GLW), (HGSI), (NUE), (PDE), (SUN), (WFC); Seymour Owns (AA), (AAPL), (BAC), (BX), (DRY), (EEM); Seymour's Firm Is Short (FXI), (F), (RIG); Karabell Owns (AAPL), (BHP), (C), (FCX), (FXI), (IBM), (JPM), (MON), (NOK), (HON)
For Charles Boorady
Citi has managed an offering of securities of (CI)
Citi has received compensation from (AET)
Citi has received compensation from (CI)
Citi has received compensation from (UNH)
Citi has has (CI) as a client in past 12 months
Citi has has (AET) as a client in past 12 months
Citi has has (HUM) as a client in past 12 months
For Joseph Greff
J.P. Morgan has an investment banking relationship with Bally, Boyd, Carnival, Host Hotels & Resorts, International Game Technology, LaSalle, Mariott, MGM Mirage, Pinnacle, Royal Carribean Cruise, Starwood, Sunstone, WMS Industries.
A J.P. Morgan exec it on the board of Choice Hotels International.
CNBC.com with wires
Data is a real-time snapshot *Data is delayed at least 15 minutes