Are Investors Too Cautious on UnitedHealth After Earnings?
UnitedHealth posted better than expected third-quarter financial results before the markets opened on Wednesday, but shares retreated afterward.
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When UnitedHealth Group Inc. (NYSE: UNH | UNH Price Prediction) released its third-quarter financial results before the markets opened on Wednesday, the firm posted $3.51 in earnings per share (EPS) and $65.1 billion in revenue. Analysts were calling for EPS of $3.09 on $63.96 billion in revenue. In the same period of last year, UnitedHealth said it had $3.88 in EPS and revenue of $60.35 billion.
During the latest quarter, the company saw continued growth, led Optum and the UnitedHealthcare public-sector and senior benefits businesses, despite the continued setbacks from COVID-19. Total revenues grew 8%, year over year, reflecting balanced, broad-based revenue growth across Optum and UnitedHealthcare.
UnitedHealthcare revenues increased 4.8% year over year to $50.4 billion. Third-quarter earnings from operations at UnitedHealthcare were $2.1 billion, down from $2.7 billion from the same period last year.
Optum third-quarter revenues and operating earnings of $34.9 billion and $2.6 billion, respectively, increased from $28.8 billion and $2.4 billion a year ago.
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The company updated its outlook for the 2020 full year. UnitedHealth now expects to see EPS in the range of $16.50 to $16.75, an increase of a quarter on both ends. Consensus estimates call for $16.58 in EPS and $255.65 billion in revenue for the full year.
On the books, the company ended the quarter with $20.81 billion in cash and cash equivalents, up from $14.25 billion at the end of 2019.
UnitedHealth stock traded down over 2% to $323.54 early Wednesday, in a 52-week range of $187.72 to $333.70. The consensus price target is $352.32.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
