UnitedHealth Earnings Imminent: Top Analysts Revise Forecasts Ahead of Earnings Call

UnitedHealth Group Incorporated (NYSE: UNH) is set to release its fourth-quarter earnings results on Thursday, January 16th, with analysts expecting a quarterly revenue increase to $101.76 billion and a decrease in earnings per share to $6.26. As the company's earnings approach, some of the most accurate analysts have revised their forecasts, providing valuable insights into the potential performance of the stock.



Analysts' Price Target Revisions

Several analysts have revised their price targets for UnitedHealth Group in recent months, reflecting their confidence in the company's future performance:

* Truist Securities analyst David Macdonald maintained a Buy rating but cut the price target from $625 to $610 on January 6, 2025. This analyst has an accuracy rate of 64%.
* Oppenheimer analyst Michael Wiederhorn maintained an Outperform rating and boosted the price target from $610 to $640 on December 6, 2024. This analyst has an accuracy rate of 61%.
* Stephens & Co. analyst Scott Fidel maintained an Overweight rating and raised the price target from $605 to $675 on December 5, 2024. This analyst has an accuracy rate of 67%.
* Deutsche Bank analyst George Hill maintained a Buy rating and raised the price target from $595 to $625 on December 3, 2024. This analyst has an accuracy rate of 60%.
* UBS analyst Kevin Caliendo maintained a Buy rating and cut the price target from $680 to $650 on October 16, 2024. This analyst has an accuracy rate of 70%.



Analysts' Rating Changes

Out of 24 analysts covering the stock, opinions include 22 "Strong Buys” and two "Moderate Buys." This configuration is slightly more bullish than three months ago, with 21 analysts suggesting a "Strong Buy."

Key Factors Influencing Analysts' Revisions

Several key factors influence the analysts' revisions to their earnings forecasts for UnitedHealth:

1. Revenue Growth: Analysts expect UnitedHealth's revenue to increase to $101.76 billion in the fourth quarter, up from $94.43 billion in the same period last year. This growth is driven by the company's diversified healthcare offerings, including health benefits, care delivery, technology-enabled health services, and pharmacy care programs.
2. Earnings per Share (EPS) Changes: Analysts anticipate a decrease in EPS to $6.26 in the fourth quarter, compared to $6.16 in the year-ago quarter. However, it is essential to note that this decrease is not a reflection of the company's overall performance, as EPS is expected to grow year-over-year in the full-year 2024 and 2025.
3. Medical Loss Ratio (MLR): The MLR is a critical factor affecting UnitedHealth's earnings. In the third quarter, the MLR was 85.2%, which was worse than expected and contributed to a stock sell-off post-earnings release. Analysts are closely monitoring the MLR to assess the company's cost management and profitability.
4. Medicare Advantage (MA) Ratings: UnitedHealth is involved in a lawsuit against the Centers for Medicare & Medicaid Services (CMS) regarding the downgrading of its MA plans' quality ratings. The outcome of this lawsuit could impact the company's earnings and stock price.
5. Inflation Reduction Act (IRA): The IRA has led to changes in drug costs and utilization patterns, which may affect UnitedHealth's earnings. The company expects these impacts to be more significant in 2025, and analysts are incorporating these factors into their earnings forecasts.
6. Investment in Growth Pillars: UnitedHealth continues to invest in its growth pillars, such as expanding its consumer base, improving healthcare services, and simplifying the health system. These investments may impact short-term earnings but are expected to drive long-term growth.
7. Market Performance: UnitedHealth's stock performance relative to the broader markets and its peers in the healthcare sector also influences analysts' revisions to their earnings forecasts. In 2024, UNH shares have underperformed the S&P 500 Index and the Health Care Select Sector SPDR Fund on a YTD basis.

These factors, along with others mentioned in the provided materials, contribute to the analysts' revisions of their earnings forecasts for UnitedHealth Group.

Conclusion

As UnitedHealth Group Incorporated (NYSE: UNH) approaches its fourth-quarter earnings release, analysts have revised their forecasts to reflect their confidence in the company's future performance. With a majority of analysts maintaining or increasing their price targets and a majority rating the stock as a "Strong Buy," investors can expect a positive outlook for the company. However, it is essential to consider the various factors influencing analysts' revisions and monitor the company's performance closely to make informed investment decisions.