/Unitedhealth%20Group%20Inc%20%20phone%20and%20site-by%20T_Schneider%20via%20Shutterstock.jpg)
UnitedHealth Group Incorporated (UNH), headquartered in Minnetonka, Minnesota, owns and manages organized health systems. With a market cap of $545 billion, the company provides employers products and resources to plan and administer employee benefit programs serving customers worldwide.
Shares of this health insurance giant have underperformed the broader market considerably over the past year. UNH has gained 10% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 30.4%. In 2024, UNH’s stock rose 12.5%, compared to the SPX’s 23.1% rise on a YTD basis.
Narrowing the focus, UNH’s outperformance is apparent compared to the iShares U.S. Healthcare Providers ETF (IHF). The exchange-traded fund has gained about 3.9% over the past year. Moreover, UNH’s double-digit returns on a YTD basis outshine the ETF’s marginal losses over the same time frame.
UNH underperforms as medical costs rise, fueled by pandemic aftermath. Additionally, aggressive billing, cyberattack costs, and reduced Medicaid coverage add to pressures, leading to downward earnings revisions and investor concerns.
On Oct. 15, UNH shares closed down more than 8% after reporting its Q3 results. Its adjusted EPS of $7.15 beat Wall Street expectations of $7.02. The company’s revenue was $100.8 billion, topping Wall Street forecasts of $99.5 billion. UNH expects full-year adjusted EPS to be between $27.50 and $27.75.
For the current fiscal year, ending in December, analysts expect UNH’s EPS to grow 9.9% to $27.60 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 24 analysts covering UNH stock, the consensus is a “Strong Buy.” That’s based on 22 “Strong Buy” ratings, and two “Moderate Buys.”
This configuration is more bullish than two months ago, with 21 analysts suggesting a “Strong Buy.”
On Nov. 3, Wells Fargo & Company (WFC) analyst Steve Baxter maintained a “Buy” rating on UNH with a price target of $630, implying a potential upside of 6.4% from current levels.
The mean price target of $625.79 represents a 5.7% premium to UNH’s current price levels. The Street-high price target of $715 suggests an upside potential of 20.7%.
