UnitedHealth Group Incorporated (UNH) is a diversified healthcare company that operates through four broad segments: UnitedHealthcare; Optum Health; Optum Insight; and Optum Rx.
The health insurance provider recently announced that its costs were rising due to an upsurge in adult surgeries. This led to a drop in share prices of health insurance companies, as the benefits of adult surgery deferments due to the pandemic appear to be waning.
However, the health insurance industry is expected to stay buoyed due to the rising geriatric population. The global health insurance market was valued at $3 trillion in 2022 and is expected to grow at a 5.5% CAGR between 2023 and 2032.
Let’s look at the trends of some of UNH’s key financial metrics to understand why it could be a solid buy now despite its cost concerns.
UnitedHealth Group's Net Income and Revenue Trends: Examining Growth and Fluctuations from 2020-2023
Despite minor fluctuations, the trend of UNH's trailing-12-month net income displays an overall increasing pattern from June 2020 to March 2023.
- June 2020: $17.1 billion
- September 2020: $16.7 billion
- December 2020: $15.4 billion
- March 2021: $16.9 billion
- June 2021: $14.5 billion
- September 2021: $15.4 billion
- December 2021: $17.3 billion
- March 2022: $17.45 billion
- June 2022: $18.25 billion
- September 2022: $19.43 billion
- December 2022: $20.12 billion
- March 2023: $20.7 billion
Emphasizing the more recent data and the last value in the series:
- In the last few quarters, net income has steadily increased, from $17.3 billion in December 2021 to $20.7 billion in March 2023.
- As of March 2023, the net income stands at $20.7 billion.
Growth rate: The growth rate between the first (June 2020) and the last (March 2023) values calculates to approximately 21.46%, demonstrating an overall positive increase in net income.
The UNH reported a steady trailing-12-month revenue increase from June 2020 to March 2023. Here's a summary of the revenue trend:
- June 30, 2020: $247.81 billion
- September 30, 2020: $252.57 billion
- December 31, 2020: $257.14 billion
- March 31, 2021: $262.92 billion
- June 30, 2021: $272.09 billion
- September 30, 2021: $279.32 billion
- December 31, 2021: $287.60 billion
- March 31, 2022: $297.55 billion
- June 30, 2022: $306.56 billion
- September 30, 2022: $315.12 billion
- December 31, 2022: $324.16 billion
- March 31, 2023: $335.94 billion
The revenue experienced fluctuations during this period, with the most significant growth rate observed from June 30, 2021 ($272.09 billion) to March 31, 2023 ($335.94 billion).
Overall, the growth rate from the first value ($247.81 billion) in June 2020 to the last value ($335.94 billion) in March 2023 is approximately 35.56%. The recent data indicates a continued upward trend in UNH's revenue.
The gross margin trends and fluctuations for UNH can be observed as follows:
- June 2020: 26.40%
- September 2020: 26.30%
- December 2020: 26.10%
- March 2021: 26.20%
- June 2021: 24.30%
- September 2021: 24.30%
- December 2021: 24.20%
- March 2022: 23.90%
- June 2022: 24.00%
- September 2022: 24.20%
- December 2022: 24.60%
- March 2023: 24.80%
From June 2020 to March 2023, UNH's gross margin showed a slight overall decline but experienced minor fluctuations over the period. Recently, there has been a small increase in the percentage between December 2022 and March 2023, from 24.60% to 24.80%.
The analyst price target for UNH has shown an overall upward trend with fluctuations over the period from November 2021 to June 2023. Here are some key highlights:
The initial target price in November 2021 was $475. There was a notable increase in January 2022 (from $480 to $512). Another significant jump occurred between April and May 2022, reaching a peak of $582.50.
Afterward, the target price experienced a slight decline, settling around $595.50 in September 2022, ultimately rising to $602.50 by December 2022. The highest reported price during this series was $605 in April 2023 before dropping to $592 in June 2023.
The growth rate measured from the first value to the last is approximately 24.63%. The analyst price target experienced a marginal decrease in the more recent data, dropping from $600 in June 2023 to $592 in late June 2023.
Analyzing UNH Share Price: Fluctuations and Growth Trends from December 2022 to June 2023
UNH experienced a general decline in share price from December 2022 to March 2023. Since then, the share price has shown a mixed, fluctuating trend with a general increase.
The growth rate varies within these periods. The initial decline in the share price from December to March could be considered decelerating, while the mixed increases and decreases from March to June show no clear acceleration or deceleration. Here is a chart of UNH's price over the past 180 days.
Examining UNH's Performance: Stability, Quality, and Sentiment Ratings Overview
UNH’s overall POWR Ratings grade is B, which equates to Buy. The stock is part of the A-rated Medical - Health Insurance industry, comprising 12 stocks. Below is a chronological overview of UNH's POWR Ratings grade and rank in category:
- December 24, 2022: POWR Grade: A, Rank in Category: #2
- January 2023: POWR Grade: A, Rank in Category: #2-4
- February 2023: POWR Grade: A, Rank in Category: #2-5
- March 2023: POWR Grade: A, Rank in Category: #4
- April 1, 2023: POWR Grade: A, Rank in Category: #5
- April 8-15, 2023: POWR Grade: B, Rank in Category: #5
- April 22-29, 2023: POWR Grade: A, Rank in Category: #2-3
- May 2023: POWR Grade: A, Rank in Category: #4-5
- June 3-10, 2023: POWR Grade: A, Rank in Category: #6
- June 20, 2023: POWR Grade: B, Rank in Category: #5
Based on the POWR Ratings for UNH, the three most noteworthy dimensions are as follows:
Stability: UNH maintained high stability scores throughout the observed period. It started with a score of 92 in December 2022 and gradually decreased to 88 by June 17, 2023.
- December 2022: 92
- June 17, 2023: 88
Quality: UNH's quality ratings also showed strength, with the highest score of 91 in December 2022. However, there was a decline in ratings, reaching a score of 87 by June 17, 2023.
- December 2022: 91
- June 17, 2023: 87
Sentiment: The sentiment dimension exhibited fluctuating trends during the given timeframe. UNH achieved the highest rating of 94 in December 2022, followed by a drop to 69 by June 17, 2023.
- December 2022: 94
- June 17, 2023: 69
How does UnitedHealth Group Incorporated (UNH) Stack Up Against its Peers?
Other stocks in the Medical - Health Insurance sector that may be worth considering are Humana Inc. (HUM), Centene Corporation (CNC), and Elevance Health, Inc. (ELV) - they have better POWR Ratings.
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UNH shares were trading at $468.97 per share on Tuesday afternoon, up $10.48 (+2.29%). Year-to-date, UNH has declined -10.87%, versus a 14.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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