UnitedHealth (UNH) AI Stock Analysis

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UnitedHealth

(NYSE:UNH)

69Neutral

UnitedHealth's overall score reflects a solid financial position with strong revenue growth and effective cash management. However, declining profitability metrics and bearish technical indicators temper the outlook. The earnings call highlighted both growth opportunities and challenges, affecting sentiment. Valuation remains balanced, offering a moderate dividend yield. Overall, the company is well-positioned but faces near-term challenges.

Positive Factors

Financial Strategy

A safer dividend and a USD10bn buyback provide a downside cushion.

Future Growth Potential

The 2026 Medicare Advantage rate update is favorable and offers potential for substantial EPS growth.

Valuation

The stock is trading at a 25% discount to S&P500, presenting a unique value given its relative stability through macro cycles.

Negative Factors

Cost Trends

The cost trends have been massively underestimated, leading to a significant cut in EPS guidance.

Earnings Guidance

UnitedHealth Group's earnings guidance was reduced due to a significant cut in OptumHealth earnings and health plan earnings.

Revenue Shortfall

Optum Health drove the bulk of the underperformance with revenues missing estimates by 13% and earnings by 30%.

UnitedHealth (UNH) vs. S&P 500 (SPY)

Market Cap

$359.09B

Dividend Yield2.18%

Average Volume (3M)7.80M

Price to Earnings (P/E)16.9

Beta (1Y)0.09

Revenue Growth8.68%

EPS Growth45.24%

CountryUS

Employees400,000

SectorHealthcare

Sector Strength50

IndustryMedical - Healthcare Plans

Share Statistics

EPS (TTM)7.20

Shares Outstanding910,223,800

10 Day Avg. Volume8,997,853

30 Day Avg. Volume7,795,747

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.58

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit6.34

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$559.13

Price Target Upside46.89% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering25

UnitedHealth Business Overview & Revenue Model

Company DescriptionUnitedHealth Group Incorporated (UNH) is a diversified healthcare and well-being company based in the United States. It operates primarily through two business platforms: UnitedHealthcare, which offers health benefits, and Optum, which provides healthcare services. UnitedHealthcare is one of the largest providers of health insurance in the US, serving individuals, employers, and government entities. Optum delivers care through networks and technology-enabled services, focusing on pharmacy care services, healthcare delivery, and health technology.

How the Company Makes MoneyUnitedHealth Group makes money primarily through its two segments: UnitedHealthcare and Optum. UnitedHealthcare generates revenue by providing health insurance products and services, including commercial health plans for individuals and employers, Medicare and Medicaid plans, and global health services. This segment earns money through premiums, fees, and other revenues from its health plans. Optum contributes to UnitedHealth Group's revenue by offering a range of healthcare services. OptumHealth provides care delivery and management services, OptumInsight offers data analytics and consulting services, while OptumRx provides pharmacy care services. Revenue from Optum is derived from service fees, consulting fees, and pharmacy service revenues. The company also benefits from strategic partnerships and acquisitions that enhance its service offerings and expand its market reach.

UnitedHealth Key Performance Indicators (KPIs)

Any

People Served

People Served
Measures the number of individuals covered or served, reflecting market reach and potential for premium revenue growth.

Chart InsightsUnitedHealthcare's recent decline in people served is concerning, reflecting challenges in its Medicare Advantage business, where care activity surged unexpectedly. Despite this, the company plans to expand its Medicare Advantage reach by 800,000 people. Optum Health's growth in value-based care is promising, though its recent dip in people served suggests revenue pressures. The earnings call highlights a strategic focus on digital engagement and Optum Rx's robust performance, which may help offset these challenges. Investors should watch for how these dynamics impact UnitedHealth's long-term growth targets.

Data provided by:

Main Street Data

UnitedHealth Financial Statement Overview

Summary

UnitedHealth exhibits strong financial health with substantial revenue growth and robust cash flow management. However, declining net profit margins and return on equity indicate potential areas for improvement. Despite these issues, the balance sheet is stable with moderate leverage, supporting future growth.

Income Statement

Very Positive

UnitedHealth has demonstrated strong revenue growth with a consistent increase in total revenue over the years, reaching $400.3 billion in 2024 from $367.5 billion in 2023, resulting in a revenue growth rate of 8.9%. The gross profit margin slightly improved from 23.6% in 2023 to 22.3% in 2024, while EBIT margin remained stable at approximately 8.1%. The net profit margin decreased from 6.1% in 2023 to 3.6% in 2024, which indicates a potential area of concern. Overall, the company shows strong revenue growth trends but with a slight decrease in profitability.

Balance Sheet

Positive

UnitedHealth's balance sheet is robust with a debt-to-equity ratio of 0.74 in 2024, indicating moderate leverage. The equity ratio is 32.9%, showing a healthy balance of equity to total assets. Return on equity, however, decreased from 25.2% in 2023 to 14.7% in 2024, suggesting reduced profitability on shareholders' equity. Despite solid equity and asset management, the decline in ROE may indicate potential challenges in maximizing shareholder value.

Cash Flow

Positive

The company has maintained a positive free cash flow, although it decreased from $25.7 billion in 2023 to $20.7 billion in 2024, reflecting a free cash flow growth rate of -19.5%. The operating cash flow to net income ratio improved to 1.68 in 2024, indicating strong cash generation relative to net income. The free cash flow to net income ratio is 1.44, demonstrating effective cash flow management. Despite a decline in free cash flow growth, the overall cash flow position remains solid.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
400.28B	367.53B	322.13B	285.27B	255.64B
	Gross Profit
89.40B	86.87B	77.59B	67.33B	65.50B
	EBIT
32.29B	32.36B	28.43B	23.97B	22.41B
	EBITDA
9.77B	32.52B	31.84B	27.07B	25.30B
	Net Income Common Stockholders
14.40B	22.38B	20.12B	17.29B	15.40B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
29.11B	29.63B	27.91B	23.91B	19.78B
	Total Assets
298.28B	273.72B	245.71B	212.21B	197.29B
	Total Debt
76.90B	62.54B	57.62B	46.00B	43.47B
	Net Debt
51.59B	37.11B	34.26B	24.63B	26.55B
	Total Liabilities
195.69B	174.80B	159.36B	135.73B	126.75B
	Stockholders Equity
92.66B	88.76B	77.77B	71.76B	65.49B
Cash Flow		Free Cash Flow
20.70B	25.68B	23.40B	19.89B	20.12B
	Operating Cash Flow
24.20B	29.07B	26.21B	22.34B	22.17B
	Investing Cash Flow
-20.53B	-15.57B	-28.48B	-10.37B	-12.53B
	Financing Cash Flow
-3.51B	-11.53B	4.23B	-7.46B	-3.59B

UnitedHealth Technical Analysis

Technical Analysis Sentiment

Negative

Last Price380.64

Price Trends

50DMA

484.20

Negative

100DMA

498.84

Negative

200DMA

537.60

Negative

Market Momentum

MACD

-34.57

Positive

RSI

23.64

Positive

STOCH

6.43

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UNH, the sentiment is Negative. The current price of 380.64 is below the 20-day moving average (MA) of 446.52, below the 50-day MA of 484.20, and below the 200-day MA of 537.60, indicating a bearish trend. The MACD of -34.57 indicates Positive momentum. The RSI at 23.64 is Positive, neither overbought nor oversold. The STOCH value of 6.43 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UNH.

UnitedHealth Risk Analysis

UnitedHealth disclosed 20 risk factors in its most recent earnings report. UnitedHealth reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

UnitedHealth Peers Comparison

Overall Rating

UnderperformOutperform

Sector (52)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ELV	78 Outperform	$93.53B	16.24	14.24%	1.60%	6.63%	-3.26%
CNC	75 Outperform	$29.70B	8.89	12.59%	―	8.85%	33.30%
CI	74 Outperform	$90.75B	18.55	12.37%	1.71%	25.21%	-29.37%
CVS	73 Outperform	$83.78B	16.03	7.00%	3.92%	4.84%	-26.54%
HUM	69 Neutral	$30.39B	18.15	10.09%	1.40%	10.09%	-12.18%
UNH	69 Neutral	$359.09B	16.92	24.33%	2.18%	8.68%	45.24%
Sector *	52 Neutral	$5.17B	3.59	-42.19%	2.82%	15.05%	-0.04%

* Healthcare Sector Average

Performance Comparison

UNH

UnitedHealth

380.64

-124.10

-24.59%

CNC

Centene

62.79

-15.00

-19.28%

Cigna

333.46

-9.04

-2.64%

CVS

CVS Health

66.97

13.62

25.53%

HUM

Humana

249.53

-82.06

-24.75%

ELV

Elevance Health

404.58

-126.94

-23.88%

UnitedHealth Earnings Call Summary

Earnings Call Date:Apr 17, 2025

(Q1-2025)

% Change Since: -34.94%|

Next Earnings Date:Jul 16, 2025

Earnings Call Sentiment Neutral

The earnings call reflected strong business growth in areas like Medicare Advantage and Optum Rx, but was overshadowed by challenges including unexpected increases in care activity and issues with Medicare member profiles, leading to a lowered earnings outlook.

Q1-2025 Updates

Positive Updates

UnitedHealthcare Medicare Advantage Growth

UnitedHealthcare's Medicare Advantage business is on pace to serve an additional 800,000 people this year.

Optum Health Value-Based Care Expansion

Optum Health is on track to add 650,000 net new patients to value-based care arrangements.

Optum Rx Strong Performance

Optum Rx is experiencing a strong selling season with new wins and high retention of long-term customers, underscoring the value PBMs play in reducing drug prices.

Increased Digital Engagement

UnitedHealth Group's new tools have led to a more than 40% increase in digital engagement among senior members.

Negative Updates

Unexpected Increase in Care Activity

First-quarter 2025 care activity in UnitedHealthcare's Medicare Advantage business increased at twice the planned rate, notably in physician and outpatient services.

Challenges with Medicare Member Profiles

Changes in Optum's Medicare membership profiles led to 2025 revenue impacts due to lower-than-expected engagement and reimbursement levels.

Higher Medical Care Ratio

The full-year medical care ratio is now expected to be 87.5%, reflecting higher utilization among senior populations and the revenue profile of Optum Health.

Disappointment in Adjusted Earnings Outlook

The adjusted earnings per share outlook for the year was revised to $26 to $26.50, lower than previously expected.

Company Guidance

During the UnitedHealth Group First Quarter 2025 Earnings Conference Call, CEO Andrew Witty provided guidance on several key metrics. The company revised its adjusted earnings per share outlook for the year to a range of $26 to $26.50, citing unusual performance issues primarily due to increased care activity and changes in member profiles in its Medicare businesses. UnitedHealthcare's Medicare Advantage business experienced a care activity increase that was twice the rate anticipated, particularly in physician and outpatient services. Despite these challenges, UnitedHealthcare is on track to serve an additional 800,000 people in Medicare Advantage, and Optum Health aims to add 650,000 net new patients to value-based care arrangements. The company's consolidated revenue outlook remains at $450 billion to $455 billion, with expected revenue increases in UnitedHealthcare and Optum Rx offsetting a reduced outlook for Optum Health. The full-year medical care ratio is projected at 87.5% plus or minus 50 basis points, reflecting higher utilization across senior populations. UnitedHealth Group remains committed to addressing these issues and returning to its long-term earnings per share growth target of 13% to 16%.

UnitedHealth Corporate Events

Business Operations and StrategyFinancial Disclosures

UnitedHealth Projects Strong Financial Outlook for 2025

Positive

Dec 3, 2024

UnitedHealth Group has released its financial outlook for 2025, projecting revenues between $450 billion and $455 billion, with net earnings per share ranging from $28.15 to $28.65. The company anticipates cash flows from operations to be around $32 billion to $33 billion. These projections are part of its strategic focus on improving health care delivery and efficiency, highlighted ahead of its Investor Conference.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.