Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 12 May, 25 | UNH | Buy | USD 380.64 | USD 399.0 | USD 422.0 | 1 day | 10.9% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
UnitedHealth Group Incorporated operates as a diversified health care company in the United States. It operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. The UnitedHealthcare segment offers consumer-oriented health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals; health care coverage, and health and well-being services to individuals age 50 and older addressing their needs; Medicaid plans, children's health insurance and health care programs; and health and dental benefits, and hospital and clinical services, as well as health care benefits products and services to state programs caring for the economically disadvantaged, medically underserved, and those without the benefit of employer-funded health care coverage. The OptumHealth segment provides care delivery, care management, wellness and consumer engagement, and health financial services for consumers, care delivery systems, providers, employers, payers, and public-sector entities. The OptumInsight segment offers software and information products, advisory consulting arrangements, and managed services outsourcing contracts to hospital systems, physicians, health plans, governments, life sciences companies, and other organizations. The OptumRx segment provides pharmacy care services and programs, including retail network contracting, home delivery, specialty and community health pharmacy services, and purchasing and clinical capabilities, as well as develops programs in the areas of step therapy, formulary management, drug adherence, and disease/drug therapy management. UnitedHealth Group Incorporated was incorporated in 1977 and is based in Minnetonka, Minnesota.
Shareholder Returns: The company returned approximately $5 billion to shareholders through dividends and repurchases in Q1 2025
Revenue Growth: UnitedHealth Group’s total Q1 2025 revenue grew by $9.8 billion year-over-year to $109.6 billion
Days Claims Payable Decline: Days claims payable fell to 45.5 days from 47.1 days year-over-year, reflecting faster claims processing but potentially tighter short-term liquidity management
Increased Medical Care Ratio: The medical care ratio rose to 84.8% in Q1 2025 from 84.3% in Q1 2024, indicating higher costs related to patient care
UnitedHealth Group faces significant earnings and reimbursement risks stemming from unanticipated utilization spikes in Medicare Advantage and unfavorable demographic shifts in Optum Health membership amid ongoing regulatory funding reductions
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 380.64 | 350.0 | 399.0 | 422.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Revised Earnings Outlook for 2025
UnitedHealth Group has revised its full-year 2025 net earnings outlook to a range of $24.65 to $25.15 per share, while adjusted earnings are now expected to fall between $26.00 and $26.50 per share. The revision reflects heightened medical care activity within UnitedHealthcare’s Medicare Advantage segment, as well as unanticipated reimbursement and member profile changes within Optum Health. Despite these headwinds, the company remains focused on addressing these issues throughout the year and aims to return to its long-term annual earnings growth target of 13% to 16%.
Strong Revenue Growth in First Quarter
For the first quarter ended March 31, 2025, UnitedHealth Group reported revenues of $109.6 billion, marking a year-over-year increase of $9.8 billion from $99.8 billion in Q1 2024. This growth was primarily driven by expanded service coverage and deeper integration across its enterprise. Earnings from operations reached $9.1 billion, while net margin improved to 5.7%, a significant recovery from the negative 1.4% margin reported in the same quarter of the prior year.
UnitedHealthcare Delivers Solid Growth Despite Elevated Costs
UnitedHealthcare recorded revenues of $84.6 billion in Q1 2025, a $9.3 billion year-over-year increase. Operating earnings rose to $5.2 billion, up from $4.4 billion in Q1 2024, though profitability was affected by higher-than-expected care activity, especially in Medicare Advantage. The division added 700,000 new consumers with self-funded commercial benefits and expanded its state-based community plan membership to 7.6 million. The company continues to anticipate serving up to 800,000 new senior and complex-needs patients in 2025.
Optum Revenue Rises, Though Margins Narrow
Optum reported Q1 2025 revenues of $63.9 billion, a $2.8 billion increase over the prior year. However, operating earnings of $3.9 billion reflected a decline from $4.8 billion in Q4 2024. Optum Health revenues reached $25.3 billion, with growth in patients offset by changes in legacy contracts and member mix. Optum Insight recorded $4.6 billion in revenue and a $32.9 billion backlog, while Optum Rx grew to $35.1 billion, supported by expanded client relationships and 408 million adjusted scripts, up from 395 million the previous year.
Operating Efficiency and Financial Returns
The company’s operating cost ratio improved to 12.4% in Q1 2025, down from 14.1% a year earlier, reflecting technology-driven efficiencies and the impact of changes in Medicare Part D. Cash flows from operations totaled $5.5 billion for the quarter. UnitedHealth returned nearly $5 billion to shareholders via dividends and share repurchases. Return on equity stood at 26.8%, demonstrating strong capital efficiency and earnings reliability despite short-term challenges.
Care Utilization and Policy Changes Pose Challenges
A key concern during the quarter was an increase in medical care utilization in Medicare Advantage, notably in physician and outpatient services, which exceeded the company’s planned assumptions. Additionally, changes in member demographics and lower-than-expected engagement among beneficiaries of exiting plans under Optum Health negatively impacted reimbursement levels. Both factors contributed to higher medical care ratios and compressed margins in some segments.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on UnitedHealth Group (NYSE: UNH) at the closing market price of USD 380.64, as on May 09, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Healthcare Industry: Healthcare Plans
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| UNH UnitedHealth Group Incorporated |
-17.355 5.40% | 304.23 | 22.57 | 18.38 | 1.33 | 5.65 | 1.38 | 13.97 |
| ELV Elevance Health Inc |
-7.425 1.80% | 405.06 | 18.00 | 12.66 | 0.65 | 2.87 | 0.74 | |
| CVS CVS Health Corp |
-1.37 2.15% | 62.37 | 12.06 | 9.08 | 0.29 | 1.34 | 0.47 | 8.96 |
| CI Cigna Corp |
-6.83 2.10% | 318.17 | 30.25 | 10.09 | 0.39 | 2.10 | 0.50 | |
| HUM Humana Inc |
-7.19 2.82% | 248.12 | 19.16 | 14.60 | 0.56 | 3.37 | 0.53 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 09,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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