Like many insurance companies, UnitedHealth Group (NYSE: UNH) generally demonstrates the ability to remain relatively resilient during economic downturns, mainly due to consistent demand and predictable revenue streams. Interestingly, the health insurance giant’s stock maintained an uptrend this month, defying the broader market selloff triggered by economic concerns including new import tariffs.
Resilience
The stock has grown by a third in the past twelve months, significantly outperforming the S&P 500 index during that period. The shares appear to be on course to return to the record highs they reached in early November last year. The stock’s long-term resilience and regular dividend hikes make it an attractive investment. Market watchers are bullish on UNH. As of now, their consensus target price suggests a 7% growth in the next 12 months.
When UnitedHealth reports first-quarter results on April 17, before markets open, Wall Street will be expecting adjusted earnings of $7.31 per share. That marks a significant upswing from the year-ago quarter when the company earned $6.91 per share. It is estimated that first-quarter revenues increased to $111.6 billion from $99.8 billion in the corresponding quarter of fiscal 2024.
Broad-based
In the fourth quarter of 2024, UnitedHealth’s revenues rose to $100.8 billion from $94.4 billion in the same quarter a year ago. Revenue grew across all four operating segments. Earnings, adjusted for one-off items, increased to $6.81 per share in Q4 from $6.16 per share in the year-ago quarter. Including special items, net profit attributable to shareholders was $5.54 billion or $5.98 per share, compared to $5.45 billion or $5.83 per share in Q4 2023. The bottom line exceeded expectations, while revenues missed.
UnitedHealth’s CFO John Rex said in the Q4 earnings call, “Our focus has always been on providing consumer stability and sustainable value, a factor that has built confidence and trust over the long term. As a result, in ’25, we expect growth of up to 800,000 people in individual, group, and special needs offerings. And, the growth outlook for the years ahead remains strong, with nearly half of American seniors still in outdated Medicare fee-for-service offerings, which provide less value to them and cost taxpayers more. In Medicaid, we expect to serve more people in ’25 with redetermination activities now concluded.”
Guidance
In a recent statement, the UnitedHealth leadership said it expects fiscal 2025 revenues to be in the range of $450 billion to $455 billion, and adjusted earnings per share between $29.50 and $30.00. The forecast for full-year reported profit is $28.15-28.65 per share. Optum Health, the health services arm that delivers care aided by technology and data, is expected to serve around 5.4 million value-based care patients in fiscal 2025, representing an annual growth of 650,000. The company said it plans to continue investing in business growth in FY25 while expecting operating cash flow to reach $33 billion or 1.2 times net income.
UnitedHealth’s stock opened at $578.5 on Thursday, which is well above its 52-week average price. It has gained an impressive 17% so far this year.
