UnitedHealth Group (NYSE: UNH) is set to release its Q1 2024 results on April 16, with revenue expected to reach $99.7 billion and earnings projected at $6.75 per share on an adjusted basis, in line with street expectations. The company is anticipated to benefit from the growing contribution of its Optum Health business, alongside an increase in health insurance memberships.
Investors are closely watching the medical costs in Q1, as management foresees a rise in this metric in the near future. Despite the expected in-line results for Q1, there is room for stock growth from its current levels of under $460.
UNH stock has shown gains of 30% from early January 2021 to around $460 currently, underperforming the S&P 500 in 2023. The Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 over recent years, providing better returns with less risk.
From a valuation perspective, UNH stock is deemed attractive, with an estimated valuation of $605 per share, indicating over 30% upside from its current levels. The company expects earnings in the range of $27.50 to $28.00 per share for 2024.
In the latest quarter, UnitedHealth Group reported revenue growth of 14% year-over-year, driven by increases in UnitedHealth and Optum sales. The company saw rises in total customers served for insurance offerings and the Optum segment. However, there was a rise in elective surgeries leading to increased medical costs for insurance companies.
Looking ahead, UnitedHealth Group faces near-term challenges, primarily rising medical costs and lower-than-expected Medicare Advantage payments. Despite these factors being priced in, UNH stock has seen a 15% decline year-to-date. The Q1 EPS will be a key figure to watch, with the medical care ratio likely to influence stock performance.
While UNH stock appears undervalued, monitoring how UnitedHealth Group Peers fare on key metrics will provide further insights for investors.
