Yahoo Finance Here's Why You Should Hold UnitedHealth Group (UNH) Stock Now
UnitedHealth Group Incorporated UNH is aided by a well-performing government business, owing to increasing premiums and numerous contract wins. The pursuit of buyouts and a solid financial position are other tailwinds.
Zacks Rank & Price Performance
UnitedHealth Group currently carries a Zacks Rank #3 (Hold). The stock has lost 0.5% in the past month compared with the industry’s 0.4% decline.
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Favorable Style Score
UNH currently carries an impressive Value Score of A.
Robust Growth Prospects
The Zacks Consensus Estimate for UnitedHealth Group’s 2023 earnings is pegged at $24.98 per share, which indicates an improvement of 12.6% from the year-ago reported figure. The same for revenues stands at $363.6 billion, implying 12.2% growth from the prior-year reported number.
Impressive Earnings Surprise History
UNH boasts an impressive surprise record. Its earnings outpaced estimates in each of the trailing four quarters, the average being 4%.
Solid Return on Equity
UnitedHealth Group’s efficiency in utilizing shareholders’ funds can be substantiated by its trailing 12-month return on equity of 27.1%, which remains higher than the industry’s average of 24.8%.
Robust 2023 Outlook
UnitedHealth Group anticipates revenues between $357 billion and $360 billion, the mid-point of which indicates an improvement of 10.6% from the 2022 reported figure.
Adjusted net earnings per share are estimated between $24.50 and $25 for the year. The mid-point of the updated guidance suggests 18.3% growth from the 2022 figure.
Business Tailwinds
Revenues of UnitedHealth Group continue to benefit from solid contributions from its UnitedHealthcare and Optum businesses. Premiums contributed 79.2% to the company’s total revenues in the first quarter. It is expected to rise further as UnitedHealth continues to serve more people through Medicare and Medicaid Advantage plans.
Through the UnitedHealthcare unit, UNH devises effective Medicare and Medicaid businesses, as well as integrates lucrative features within them from time to time. The top line of UnitedHealthcare segment is expected to benefit as the company grows its existing Medicaid markets and serves more people through fee-based and risk-based commercial offerings.
The company expects to add more than 900,000 members to its Medicare Advantage plan this year, expanding its membership base and fetching higher premiums. The Medicaid business is set to grow from recent contract wins in Indiana and Texas and the expansion of existing service in North Carolina.
Optum Health segment will continue to gain from more people served under value-based care arrangements and consistent strengthening of care delivery services. Optum Insight is expected to benefit from the addition of Change Healthcare and the performance of Optum Rx, which benefits from broadening pharmacy care services. Excellent customer retention should also favor Optum Rx results.
UnitedHealth Group has been pursuing collaborations with renowned healthcare providers to bolster its capabilities and solidify its nationwide presence. Its acquisition of LHC Group should enhance and expand its in-home capabilities and fuel growth in the Optum Health segment. The company’s launch of Price Edge and zero-cost life-saving drugs should help retain more customers in the future.
The company also earns through investment income. The metric increased more than one-fold in the first quarter. A high-interest rate environment should boost this metric in the future.
A solid financial position is a dire need for companies that keep an eye on continued business investments. Apart from growth-related initiatives, a sound financial stand instills confidence in UNH in the tactical deployment of capital through share buybacks and dividend payments. The company returned $3.5 billion to shareholders in the first quarter through share repurchases and dividends. Its dividend yield of 1.4% remains higher than the industry’s figure of 1.2%.
Key Concerns
The health insurer has been experiencing an increase in operating expenses due to higher medical and operating costs and the cost of goods sold. Such expenses continue to weigh on the margin expansion. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks in the Medical space are Amphastar Pharmaceuticals, Inc. AMPH, ICU Medical, Inc. ICUI and ANI Pharmaceuticals, Inc. ANIP. Each of these companies currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphastar’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 33.8%. The Zacks Consensus Estimate for AMPH’s 2023 earnings suggests an improvement of 20.8% from the year-ago reported figure, while the same for revenues indicates growth of 17.4%.
ICU Medical’s earnings surpassed estimates in three of the last four quarters, missing once, the average beat being 9.5%. The Zacks Consensus Estimate for ICUI’s 2023 earnings indicates a 7.3% rise from the prior-year reported figure, while the same for revenues suggests an improvement of 1.3%.
ANI Pharmaceuticals’ earnings outpaced estimates in each of the trailing four quarters, the average beat being 68.6%. The Zacks Consensus Estimate for ANIP’s 2023 earnings indicates a 143.4% rise from the prior-year reported figure, while the same for revenues suggests an improvement of 27.1%.
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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
Amphastar Pharmaceuticals, Inc. (AMPH) : Free Stock Analysis Report
ICU Medical, Inc. (ICUI) : Free Stock Analysis Report
ANI Pharmaceuticals, Inc. (ANIP) : Free Stock Analysis Report
