UnitedHealth Group Incorporated
continues to benefit from sustained top-line growth, robust Medicare and Medicaid business in place, an upbeat financial view for 2021 and 2022, and a solid financial position.
Zacks Rank & Price Performance
UnitedHealth Group carries a Zacks Rank #3 (Hold) currently. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
The stock has gained 43.8% over a year compared with the
’s rally of 40.1%. However, the Zacks
sector has lost 7.2% in the said time frame. The S&P 500 composite has risen 28.6% in the same time frame.
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UNH is well-poised for progress as evident from its impressive
of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Impressive Earnings Surprise History
UNH boasts an impressive earnings surprise record. It has surpassed earnings estimates in each of the trailing four quarters, the average surprise being 8.66%.
Positive Estimate Revision
The Zacks Consensus Estimate for 2022
has been revised upward by 0.7% in the past 60 days.
Solid Return on Equity
The ROE of UnitedHealth Group for the trailing 12 months is 23.1%, which remains higher than the industry average of 20.2%. This reflects UNH’s efficiency in utilizing its shareholders’ funds.
Solid Financial Outlook for 2021 and 2022
UnitedHealth Group recently issued an upbeat business outlook for 2021 and 2022, which reinstates ample growth prospects for the healthcare provider.
For 2021, UNH anticipates revenues to be roughly $287 billion, which suggests growth of 11.6% from the 2020 reported figure. The metric is expected to increase and lie within the $317-$320 billion in 2022. The Zacks Consensus Estimate for 2022 revenues indicates an increase of 10.9% year over year.
Regarding the bottom line (adjusted net earnings per share), UnitedHealth Group projects the metric between $18.75 and $18.90 in 2021. The mid-point of the revised guidance indicates an 11.5% rise from the 2020 reported figure. The bottom line is likely to grow and remain within $21.10-$21.60. The consensus mark for UNH’s 2022 earnings indicates an improvement of 15.3% on a year-over-year basis.
Strong contributions from its UnitedHealthcare and Optum businesses continue to drive UnitedHealth Group’s revenues. Both the units strive to offer patient-focused healthcare services at affordable costs across several U.S. communities and pursue the strategy of teaming up with well-established care systems to provide the same.
UNH has solid Medicare and Medicaid businesses in place through which it has been devising cost-effective health plans and extending reach across inaccessible regions. A well-diversified healthcare suite and solid nationwide presence have led to several contract wins and deal renewals for UnitedHealth Group. In 2021, some of the states that have chosen UnitedHealth Group for serving members include Ohio, Hawaii and Oklahoma. Such deals continue to bolster the company’s customer base.
An aging U.S. population favors Medicare Advantage plans, which is likely to continue driving the solid demand for UNH’s Medicare plans. In 2022, UnitedHealth Group aims to widen its service area and reach 94% of Medicare consumers spread across the United States. This endeavor will sustain UNH’s record of holding the industry’s largest Medicare Advantage presence.
The Global business of UnitedHealth Group that earlier grappled with the unanticipated deferral of care due to the COVID-19 pandemic seems to be recovering. Following a dismal period in 2020, membership of the business bounced back with a rise from the second quarter of 2021.
A strong cash position enables UNH to effectively serve short-term debt obligations. Additionally, robust cash-generating abilities allow UnitedHealth Group to pursue significant business investments and tactical capital-deployment moves via share buybacks and
payments. Its dividend yield of 1.2% remains higher than the industry’s figure of 1%.
Stocks to Consider
Axcella Health has a trailing four-quarter surprise of 0.64%, on average. The Zacks Consensus Estimate for AXLA’s 2022
suggests 3.3% year-over-year growth. The consensus mark has also moved north by 1.2% in the past 30 days. Axcella Health has a
The bottom line of Cerner outpaced estimates in each of the trailing three quarters and met once, the average surprise being 3.21%. The Zacks Consensus Estimate for CERN’s 2022
suggests 11.6% improvement year over year, while the same for revenues implies growth of 4.8%. Cerner has a VGM Score of A.
Molina Healthcare has a trailing four-quarter surprise of 4.00%, on average. The consensus estimate for MOH’s 2022
indicates an improvement of 27.3% from the prior year reported figure, while the same for revenues suggests a 12% rise from the year-ago reported figure. The expected long-term earnings growth rate is pegged at 21.1%, better than the industry’s average of 15%. Molina Healthcare boasts of a VGM Score of B.
While Axcella Health stock has lost 60.3% in a year, shares of Cerner and Molina Healthcare have gained 18.7% and 50.8%, respectively, in the same time frame.
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