UnitedHealth (UNH) Stock Gains on Beat-and-Raise, Analysts Positive

October 14, 2021 8:42 AM EDT
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Price: $433.14 +2.06%

Rating Summary:
    27 Buy, 5 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 10 | Down: 21 | New: 36
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Shares of UnitedHealth Group (NYSE: UNH) are up nearly 3% in pre-open Thursday after the company reported better-than-expected Q3 results and raised guidance.

UnitedHealth Group reported Q3 EPS of $4.52, which is better by $0.12 than the analyst estimate of $4.40. Revenue for the quarter came in at $72.3 billion versus the consensus estimate of $71.11 billion.

“Our positive growth and operating results are thanks to the 340,000 Optum and UnitedHealthcare team members who strive every day to help clinicians deliver and people access quality, affordable health care,” said Andrew Witty, chief executive officer of UnitedHealth Group.

On the guidance front, UnitedHealth Group is projecting full-year EPS between $18.65 and $18.90, with the midpoint coming in slightly better than the consensus of $18.75. The prior guidance was $18.30 to $18.80.

Cantor Fitzgerald analyst Steven Halper reiterated an Overweight rating and a $450.00 per share price target.

“The results reinforce our view that despite some near-term uncertainty around medical costs, we believe fundamentals at UNH are strong and we expect another solid year in 2022,” Halper said in a client note.

“We continue to believe that UNH's guidance is conservative. Going into the print, our estimate is $18.75, which is in line with consensus. It remains to be seen if UNH will provide any initial commentary for 2022 or wait until its annual analyst meeting, which is typically held in late November/early December. Still, we believe the company is nicely positioned for 2022,” Halper added.

Cowen analyst Gary Taylor also described results as “solid” and reiterated an Outperform rating and a $478.00 per share price target.

“UNH reported solid 3Q21 results that modestly beat consensus EPS and MLR. We believe these results are better than feared given much investor concern regarding rising medical costs during the quarter; driven by observable increase in COVID hospitalizations and uncertain, but generally rising trajectory of non-COVID deferred care. Costs are rising vs 2019 baseline (UNH’s consolidated MLR up +60bp vs 3Q19), but not as quickly as the Street feared. We expect UNH to provide initial commentary regarding 2022 headwinds and tailwinds, and likely some commentary on current 2022 consensus EPS of $21.60. Given the current high level of variability around medical cost trend, we expect a very conservative initial outlook that likely characterizes $21.60 as towards or slightly above the high end of an initial guidance range. Given current sentiment, we believe such a characterization would be positive for the stock and the group.”

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