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J. Edward Moreno

UnitedHealth beats Q1 estimates, raises annual outlook

UnitedHealth rose in premarket trading after it reported earnings results that beat Wall Street expectations and raised its full-year guidance.

For the full year 2026, the company now expects:

  • Annual adjusted earnings per share to be at least $18.25, up from the previous floor it set at $17.75 and higher than the $17.86 analysts polled by FactSet were expecting.

For the first quarter of 2026, the company reported:

  • Adjusted earnings per share of $7.23, higher than the $6.58 the Street was penciling in.

  • A medical cost ratio of 83.9%, lower than the 85.5% that was expected. The company said the decrease in spending on medical care was “driven by strong medical cost management and favorable reserve development, partially offset by consistently elevated utilization and unit cost trends.”

The company, which is the first of its peers to report earnings this quarter, was up more than 6% in early action on Tuesday. The stock is down 3.8% from the start of the year through yesterday’s close.

UnitedHealth’s rosy report also lifted some of its peers. Humana, CVS, Elevance Health, Centene, and Molina Healthcare were all up in premarket trading.

The sector has been under pressure in the past year as the cost of providing care, particularly for those on Medicare, has gone up. In the first quarter, UnitedHealth was able to grow its Medicare revenues by 1%, despite having about 1,000 fewer members, by raising the price of its premiums.

“Investors are likely showing signs of relief with this mornings pre-market on UNH,” said David Wagner, head of equity and portfolio manager at Aptus Capital Advisors. “The stock has had a volatile run over its last few earnings reports, largely dictated by surging medical costs in its Medicare Advantage business and regulatory shifts.”

Wagner continued, “While the stock has struggled for much of the past year, it is currently showing signs of a turnaround, or at least stability that investors are appreciating. The highlight of the report for me was the margins.”

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markets
Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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