UnitedHealth to Post Higher 4Q Earnings and Revenue; Target Price $575 in Best Case

The Minnesota-based health insurer UnitedHealth is expected to report its fourth-quarter earnings of $4.31 per share, which represents year-over-year growth of over 70% from $2.52 per share seen in the same period a year ago.

The largest insurance company by Net Premiums would post revenue growth of over 11% to $72.748 billion from $65.47 billion a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years.

The company projects adjusted earnings between $18.65 and $18.90 per share for 2021, up from the previous estimate of $18.30 to $18.80, according to ZACKS Research.

UnitedHealth stock closed 0.27% higher at $468.69 on Friday. The stock slumped nearly 7% so far this year after surging more than 43% in 2021.

Analyst Comments

“UnitedHealth (UNH) slightly increased 2021 adjusted EPS guidance from $18.30-18.80 to $18.65-18.90 (consensus $18.75), leaving their estimated $1.80 COVID yty EPS headwind unchanged. The implied stub 4Q21 EPS guidance of $4.11-4.36 just bounds consensus $4.34. Expect some elective volumes to flow into the 4^th qtr like they saw in September, but this is incorporated in guidance,” noted Gary Taylor, equity analyst at Cowen.

“2022 guidance largely assumes that commercial utilization is fully recovered, government utilization keeps recovering and the cost of any new COVID waves would be offset by increased deferred care and/or antiviral therapeutics. Expects double-digit growth in the VBC business for many years to come. The long-term growth target for UNH is +13-16% per year with 3-5% coming from inorganic acquisitions & share repurchases. 2022 implied growth of +12-15% in 2022 is slightly below LT EPS guidance but still reflects some conservatism for COVID and continued investments in longer-term growth opportunities in VBC, capitation and care delivery. OptumInsight 2022 OI margin is expected to grow to 28.3% at the midpoint from 2021 margin of 27.7%. An overall investment strategy is to find a market need, start small and ultimately grow and scale.”

UnitedHealth Stock Price Forecast

Sixteen analysts who offered stock ratings for UnitedHealth in the last three months forecast the average price in 12 months of $518.13 with a high forecast of $575.00 and a low forecast of $440.00.

The average price target represents a 10.55% change from the last price of $468.69. From those 16 analysts, 13 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $570 with a high of $850 under a bull scenario and $300 under the worst-case scenario. The investment bank gave an “Overweight” rating on the health care company’s stock.

“UnitedHealth Group is the number one Medicare Advantage player with ~28% market share, the number two Medicare PDP player with ~20% market share, and the number two commercial player with ~15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in a breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

Several other analysts have also updated their stock outlook. Bernstein raised the target price to $564 from $508. Truist Securities lifted the target price to $575 from $520. Credit Suisse upped the target price to $564 from $495.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

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