UnitedHealth Group Inc. (NYSE: UNH) is a well-known health insurer, offering health care benefits to millions of clients, primarily in the U.S. UNH stock recently caught investors’ attention after the company delivered impressive profit and sales for the third quarter. Here’s why United Health stock is back in the spotlight with multiple Wallstreet institutions boosting their UNH stock valuations.
United Health beats revenue consensus in Q3
The Minnesota-based company reported earnings of $4.28 per share for the three months ended September 30, up from $3.30 per share in the same period of 2020. On an adjusted basis, UnitedHealth earned $4.52 per share, beating analysts’ average estimate of $4.41 per share.
In addition, total revenue for the quarter jumped approx. 11 percent on a year-over-year basis to $72.3 billion, ahead of the consensus forecast of $71.347 billion. The better-than-expected quarterly results were mainly driven by solid growth in the company’s offerings during the quarter.
UnitedHealth Group operates through two different business platforms, i.e., UnitedHealthcare and Optum. If we compare the performance of the two segments, UnitedHealthcare generated revenue of $55.9 billion in the third quarter, translating an 11 percent improvement. Furthermore, UnitedHealth Care noted they expect more than 900,000 additional customers in Medicare Advantage this year including Dual Special Needs Plans.
In comparison, Optum revenue grew by 13.9 percent year-on-year to $39.8 Billion. Furthermore, Optum’s revenue per consumer grew by 30% year-over-year. Overall, total consolidated revenue for both segments after eliminations ($23.3 Billion) was $72.337 Billion which beat Wallstreet’s expectations.
The parent company also raised its profit outlook for the full year. The company now expects to report adjusted earnings in the range of $18.65 per share to $18.90 per share, compared to its previous guidance between $18.30 per share and $18.80 per share. The revised outlook is in line with the consensus forecast of $18.75. The boosted EPS forecast is another positive investors can take away from the Q3 results.
Credit Suisse boosts UNH stock price target to $495
UnitedHealth shares rose to a nearly two-month high following its solid third-quarter performance and an upbeat outlook. The stock is now up more than 22 percent on a year-to-date basis, including the latest gain.
Across the board of Wallstreet analysts, majority have a “Buy” rating for UnitedHealth stock. Moreover, the average 12-month price target for the stock is $478, up nearly 12 percent from the closing price of $428.07 in the previous trading session.
In particular, Credit Suisse analyst A.J. Rice recently raised the UNH price target to $495 while maintaining an Outperform rating. The analyst highlighted the strong performance in the third quarter report which beat Wallstreet consensus. Furthermore, Rice noted the success of Q3 was mainly driven by an improved Medical Loss ratio (MLR) and higher revenues. However, Credit Suisse is not the only Wallstreet institution to boost their UNH stock valuation.
Evercore analyst sets 2023 EPS forecast at $24.90
In addition, Evercore ISI analyst Michael Newshel also boosted their valuation on UNH stock to $480. The analyst commented on United Health Group’s forecasted EPS for FY22 at $21.64, noting this was “reasonable”. Looking ahead, the analyst set his 2023 EPS forecast at $24.90, suggesting a forecasted EPS improvement of 15.06% compared with 2022 FY consensus data.
The Bottom Line – United Health Stock Forecast
In summary, after posting a strong Q3 report the company has received bullish sentiment from Wallstreet with boosted targets from Credit Suisse and Evercore ISI. After reaching 5 year lows during the 2020 pandemic sell off, UNH stock has recovered by doubling its value since March 2020. We will see whether United health group can continue this momentum through 2021 and beyond.
The information above is presented for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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