UnitedHealth Group (NYSE: UNH) has been expanding its market value steadily, especially after reporting stronger-than-expected third-quarter results a few months ago. Since then, the stock gathered steam and reached an all-time high ahead of the fourth-quarter report, which will be released on January 15 before the opening bell.
The majority of the analysts have assigned the stock buy rating, which has gained 19% in the past twelve months. However, the shares underperformed the industry during that period.
Estimate
It is estimated that the healthcare conglomerate ended the fiscal year on an impressive note, with earnings climbing 15% to $3.28 per share. The bottom-line growth reflects a 5% increase in revenues to $61.06 billion. Earnings topped Wall Street’s expectations in each of the previous three quarters – a trend that is expected to continue.
The company’s health benefits segment UnitedHealthcare continues to gain from the steady expansion of the Medicare and Medicaid businesses, helped mainly by the popularity of the Medicare Advantage program. Optum, the platform that helped UnitedHealth emerge from a health insurance company into a full-fledged healthcare provider, has contributed consistently to the top-line while expanding its portfolio through strategic acquisitions.
Fingers Crossed
Meanwhile, investors might remain cautious due to uncertainties related to the government’s move to reform the healthcare system and proposal for the Medicare-For-All scheme. Healthcare plans are expected to witness significant changes after the upcoming presidential election. In the long term, the sentiment should turn positive, given the firm’s strong fundamentals. Going ahead, margins at the Medicare business might come under pressure from the introduction of health insurance tax.
Peer Performance
Among the other healthcare firms, Humana Inc. (HUM) reported better-than-expected earnings and revenues for its most recent quarter, supported by a strong uptick in the Medicare Advantage business. The management also revised up its full-year guidance.
Related: UnitedHealth Q3 2019 Earnings Conference Call Transcript
Earlier, UnitedHealth’s stronger-than-expected third-quarter results brought cheer to shareholders. Earnings moved up 14% annually to $3.88 per share, aided by a 7% growth in revenues to %60.4 billion. The top-line benefited from strong performance by Optum and continued increase in Medicare Advantage membership.