UnitedHealth Raises Guidance After Strong Quarter
UnitedHealth (NYSE: UNH) has been trending higher since well before the COVID-19 pandemic began and looks like it is ready to continue that trend. The move is being driven by institutional and analyst support that is in turn driven by the company’s results. Results for Q1 2022 are so good the company raised its guidance and we think it will raise guidance again later in the year.
Institutional activity bears the hallmarks of rotation and profit-taking but has been net bullish for the last 6 quarters. Their activity reached a peak in Q4 that pushed share prices to an all-time high that we see the market surpassing over the next few months. In total, net buying is worth about 2.8% of the market cap over the past 12 months and had total ownership up to 86%. The insiders, on the other hand, have been selling but they only own about 0.5% of the company and their activity bears the hallmarks of share-based-compensation-related sales.
The analysts have been much more bullish in their activity. The analysts have only issued bullish commentary since well before the pandemic started and we think that trend will continue. There have been no commentaries since the Q1 results were released but it is only a matter of time until they are. Until then, the Insidertrades.com consensus of 22 analysts is a firm Buy and that has held steady for over a year. The consensus price target of $522 is up in the 12, 3, and 1-month comparison but is still lagging the market. The most recent string of price targets has the stock trading closer to $555 however, and that group includes the high price target of $610. The $610 target is the most recent target, set in early April, and is 13.5% above the current price action.
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UnitedHealth Beats And Raises
United Health had a good quarter verging on great and was able to raise the full-year guidance because of it. The company reported $80.1 billion in net revenue for a gain of 14.1% over last year. The revenue beats the consensus by 170 basis points as well and is driven by double-digit growth in both the UnitedHealth and Optum segments. Optum led with a gain of 18.9% followed by UnitedHealth’s 13.6% and strength is expected to continue in both segments.
Moving down to earnings, the news is a little mixed but ultimately bullish as COVID-effects, mix, and efficiencies helped offset a higher medical care ratio and drive strength on the bottom line. On the bottom line, the company reported $5.49 in adjusted EPS which is up $0.18 or 3.3% from last year and beat the consensus by $0.14.
The company raised guidance due to the Q1 strength but there is a caveat. While revenue and earnings were raised it was only to level in line with the consensus and there is ample room in the EPS range for downside surprises. In our view, the guidance is cautious given trends in both healthcare and employment.
The Technical Outlook: UnitedHealth Enters Consolidation
Price action in UnitedHealth has been in a long and sustained uptrend that we see continuing in 2022. The caveat is that price action is well above the 150-day EMA and at a peak that may produce a pull-back or consolidation in prices. If price action pulls back from here it will most likely find support between $480 and $520. If price action consolidates at this level, it will likely move sideways until the EMA can catch up. In either case, a touch on the EMA is a trigger point for buyers and could produce the next trend-following signal.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| UnitedHealth Group (UNH) | $597.56 | -0.5% | 1.41% | 38.93 | Moderate Buy | $615.53 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
