UnitedHealth Group (NYSE: UNH) not too long ago reported its This autumn outcomes, with revenues lacking and earnings exceeding the road expectations. The corporate reported income of $100.8 billion and adjusted earnings of $6.81 per share, in comparison with the consensus estimates of $101.8 billion and $6.72, respectively. Regardless of an upbeat earnings, UNH inventory dropped as a lot as 6% on Thursday, January 16, as the corporate’s medical prices trended increased. If you need upside with a smoother experience than a person inventory, think about the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
How Did UNH Fare In This autumn?
UnitedHealth Group’s revenue of $100.8 billion in This autumn displays a 7% y-o-y progress, led by increased gross sales in each the UnitedHealth and Optum segments, which grew 5% and 9% (y-o-y), respectively. The important thing metric which traders have been eyeing was the medical care ratio, which got here in at 87.6%, versus 85% within the prior-year quarter. This was increased than the consensus estimates of round a 100 bps rise. The corporate reported an adjusted EPS of $6.81 per share as in comparison with $6.16 within the prior yr quarter.
General, whereas the corporate reported a beat on the underside line, traders weren’t proud of the upper medical prices and the outlook for 2025. The corporate expects the medical prices to stay elevated in 2025; although that’s mirrored within the earnings outlook of $29.50 to $30.00 per share.
What Does This Imply For UNH Inventory?
It’s evident from the decline in UNH inventory that the traders weren’t proud of the medical prices. UNH inventory is down 1% for the reason that starting of 2024, versus a 25% rise for the broader S&P500 index. Taking a look at a barely longer interval, the rise in UNH inventory during the last four-year interval has been removed from constant and has largely been as unstable because the S&P 500. Returns for the inventory have been 45% in 2021, 7% in 2022, 1% in 2023, and -2% in 2024.
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Given the present unsure macroeconomic surroundings round fee cuts and modifications within the White Home, might UNH face an analogous state of affairs because it did in 2023 and 2024 and underperform the S&P over the subsequent 12 months — or will it see a robust bounce? From a valuation perspective, UNH inventory appears like it will possibly see increased ranges from right here. At its present ranges of $510, it trades at 17x ahead anticipated earnings of $29.75 – on the mid-point of the offered vary, versus the inventory’s common P/E ratio of 21x during the last three years.
Whereas UNH inventory appears prefer it has some room for progress, it’s useful to see how UnitedHealth Group Friends fare on metrics that matter. You will discover different useful comparisons for firms throughout industries at Peer Comparisons.
| Returns | Jan 2025 MTD [1] |
Since begin of 2024 [1] |
2017-25 Whole [2] |
| UNH Return | 1% | -1% | 259% |
| S&P 500 Return | 1% | 24% | 165% |
| Trefis Strengthened Worth Portfolio | 3% | 20% | 774% |
[1] Returns as of 1/17/2025
[2] Cumulative whole returns for the reason that finish of 2016
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
