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UnitedHealth (UNH) stock forecast: Another ‘healthy’ year ahead?

By Fitri Wulandari

Edited by Alexandra Pankratyeva

16:22, 6 April 2022

UnitedHealth (UNH) stock forecast. In this photo illustration the UnitedHealth Group logo is displayed on a smartphone.
UnitedHealth (UNH) stock forecast: Another ‘healthy’ year ahead? Photo: rafapress / Shutterstock.com

UnitedHealth Group (UNH), the largest insurance company by market capitalisation, had posted a robust growth in the past two years amid the rippling impact of the Covid-19 pandemic on the global and US economy. 

The company’s stock gained 19.29% in 2020 and 43.19% in 2021 despite Covid-19 restriction leading many businesses to downsize or close, reducing renewal or enrolment of health coverage from both individual and corporate customers. 

This year, UNH expects to continue its robust growth. However, it has been facing a headwind from the Department of Justice’s (DoJ) recent move to block its acquisition of Change Healthcare, a healthcare technology provider. UNH announced the acquisition plan in January 2021.

As of 6 April, United Healthcare Group has a market capitalisation of $487.15bn, according to Companiesmarketcap.com.

Will UnitedHealth maintain its stellar performance this year and what factors will affect UNH stock prediction?

UnitedHealth stock performance: Solid 2021 growth

The US healthcare behemoth’s stock started 2021 at $349.50 a share. It continued to climb to $380 lever by end of March despite the company’s deal with Change Healthcare was under scrutiny by the DoJ for possible antitrust breach. 

At the end of April 2021, the Minneapolis-based insurer’s share crossed $400 and hit $415 by the end of May. But UNH stock dipped to below $400 in the second week of June after it was forced to backtrack on a plan to review the medical records of its customers' visits to emergency departments to determine whether it should cover those hospital bills.

By July, the company’s stock had recovered to above $400. It advanced to cross $500 in the final days of 2021, closing the year gaining 43.19%. 

Unitedhealth stock analysis: Major price drivers and technical view

UnitedHealth (UNH) maintained its performance starting 2022 with the stock trading at $502.28 in early January. But it gave up its gain and traded below $500 until middle of March this year after the DoJ announced on 24 February that it filed a civil lawsuit to block UnitedHealth’s proposed acquisition of Change Healthcare. 

In the complaint, DoJ alleges that “the proposed $13 billion transaction would harm competition in commercial health insurance markets, as well as in the market for a vital technology used by health insurers to process health insurance claims and reduce health care costs.”

UNH’s stock traded at the lowest for the year at $445.73 on the day of DoJ’s lawsuit announcement. However, the stock recovered to trade back at above $500 in the first week of March. 

In end March, UNH’s stock had risen to $521 after the group, through its subsidiary Optum, acquired LHC Group, a home health care provider. The acquisition, which is expected to be completed by the second half of this year, would expand the group’s exposure to home health care service. 

Grand View Research in its recent report said the global home healthcare market size was valued at $299bn in 2020. It forecast that the market was to grow at a compound annual growth rate (CAGR) of 7.88% from 2021 to 2028 due to the growing geriatric population and rising incidence of target diseases, such as dementia and Alzheimer’s. 

In the latest UnitedHealth stock news, the company announced on 5 April that it extended Optum and Change Healthcare merger agreement to 31 December 2022. The extension comes as the company is awaiting trial on the DoJ lawsuit which is scheduled to start on 1 August and will run for two weeks. 

UNH stock value hit the highest level for this year at $524.73 on 5 April following the announcement. With a slew of bearish news, UNH stock value has only gained around 3% so far this year.

In terms of technical analysis, short-term sentiment for UNH stock was neutral at the time of writing (6 April) with most moving averages pointing to ‘buy’. The stock has been trading far above its 200-day SMA at $448.60, which could be seen as a support level. The relative strength index (RSI) reading of 61.70 kept neutral. 

UnitedHealth (UNH) technical analysis: Five-year performance

UnitedHealth outlook: Latest earnings

UnitedHealth Group booked a revenue of $73.74bn in the fourth quarter of 2021, topping analysts ‘estimate of $72.86bn polled by MarketBeat. It was also up 12.5% from $65.5bn in the fourth quarter of 2020. 

The company recorded $287.6bn of revenue in 2021, a 12% increase from $257.1bn in 2020, with growth across the Optum and the UnitedHealthCare businesses, according to the company’s full year 2021 financial results released on 19 January. 

UnitedHealth recorded earning per share of $4.48 per share in 2021, exceeding analysts’ estimate of $4.30. 

Last year, the company’s cost operating ratio dropped 14.8% from 16.2% in 2020 as the permanent repeal of health insurance tax took effect, as well as due to COVID-19 effects, and continued productivity advances. 

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The US Government under President Donald Trump repealed the health insurance tax (HIT) in 2019, but it was only effective in 2021. HIT was part of the Affordable Care Act which aimed at lowering insurance premiums, but opponents of HIT argued it would cost policy holders higher annual premiums. 

The company also booked cash flows from operations at $22.3bn or 1.3x times net income last year. With ample cash flows, the company was able to return $5.3bn to shareholders through dividends, an increase of 15% from a year ago. It also repurchased 12.8 million shares for $5.0bn. 

On 22 February, the group announced a cash dividend payment of $1.45 per share, to be paid on March 22, 2022. The dividend payment hasn’t changed since June 2021. 

For this year, UnitedHealth Group targets revenues of $317bn to $320bn, adjusted net earnings of $21.10 to $21.60 per share and cash flows from operations of $23bn to $24bn. 

UNH stock projections: Analyst sentiment

Commenting on the UnitedHealth Group stock price forecast, David Jones, Chief Market Strategist at Capital.com, said:

“United Health has had a great run since the March 2020 low – and for now at least, that trend is still continuing. Two years ago, the stock price had slipped below $200 but this year has seen it break above $500 and set fresh all-time highs –  a remarkable performance given the backdrop for markets over recent months.
“Investors seem happy to be buyers on dips. We have seen major support in the $440 area over the last 4 months, so even if United Health experienced a 10% decline from current prices it is still within that uptrend. Given the current momentum, a 10% move higher from current levels in the medium term would not seem to be an ambitious target so investors may well be eyeing up $550 a share as the next objective.”

Analysts at Zacks.com believed UnitedHealth's top line will continue to grow in the coming years, owing to the company's strong market position and an appealing core business, which will be supported by new deals, renewed agreements, and the expansion of service offerings.

“Its solid health services segment, which is on track to bulk up with the recently announced LHC group purchase, provides diversification benefits. The firm's government business remains well-poised for growth,” Zacks.com analysts on 31 March. 

“A strong balance sheet and strong cash generation capabilities allow for prudent capital deployment through share buybacks and dividends,” the analysts added. 

However, the analysts expected commercial business would remain soft as a result of COVID-induced volatility, and that rising operating costs would reduce profits.

Morningstar expected to maintain its fair value estimate for UnitedHealth as the company is forecast to perform inline with its 2022 guidance, particularly on a cash flow basis.

“The group's shares continue to look moderately rich to us, especially relative to MCO (managed care organisation) peers that have similar growth prospects but trade at lower multiples. Like its peers, UnitedHealth's economic moat remains narrow, which recognizes its top-tier position in medical insurance, pharmacy benefits, caregiving services, and analytical tools offset by long-term policy risks,” said Julie Utterback, senior equity analyst at Morningstar. 

UnitedHealth (UNH) stock forecast: Targets for 2022-2027

Is the UnitedHealth stock a ‘buy’, a ‘sell’ or a ‘hold’? Nineteen of 22 analysts polled by MarketBeat (as of 6 April) gave ’buy’ rating for the UNH stock, one had a ‘strong buy’ rating and two rated it a ‘hold’. 

However, the analysts’ UNH stock price target for the 12-month period stood at an average price of $510.52, which represents a 1.40% downside from the last closing price of $517.76 on 5 April. The highest target was set at $575, while the lowest one at $450.

United Health (UNH) analyst ratings and price targets

As of 6 April, The UNH stock also got a consensus ‘strong buy’ rating from 16 analysts tracked by TipRanks, with 14 rated the stock a ‘buy’ and two recommended a ‘hold’. The analysts offered a consensus 12-month price target for the stock at $534.88, which represents a 3.31% potential upside from the latest closing price on 5 April. 

The analysts did not provide a long-term prediction on the stock. However, machine learning forecasting site Gov Capital and algorithm-based forecasting site Wallet Investor were bullish on the UnitedHealth (UNH) stock forecast. 

Gov Capital expected UNH stock to end up 2022 at an average price of $658.976, and move further to $973.549 by the end of December 2023. Its UNH stock forecast 2025 estimated the stock could double to hit $1,858.843 by end of the year. 

Wallet Investor supported the bullish forecast and estimated UNH stock could hit $578.327 at the end of 2022, $664.661 at the end of 2023, and $838.129 at the end of 2025. Although the service did not provide targets for 2030, its five-year UNH stock forecast expected it to trade at $941.187 in April 2027.

When looking at any UNH stock prediction, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct due diligence before trading and bear in mind that past performance is no guarantee of future results.

FAQs

Is UNH stock a buy?

The majority of analysts mentioned in the article rated the UNH stock as a ‘buy’, as of 6 April. However, whether UNH is a suitable asset for you depends on your personal circumstances and risk tolerance, among other factors. You should do your own research into the company’s performance and evaluate the level of risk you are prepared to accept before investing. Never invest money you cannot afford to lose.

Why has UnitedHealth stock price been going up?

UNH stock has been going up on its solid financial performance and acquisition plans.

Will UnitedHealth stock price go up or down?

Despite predominantly bullish analysts ratings for the UNH stock as of 6 April, you should note that analysts’ forecasts can go wrong. They are based on the stock’s past performance. Past performance never guarantees future results. Always conduct your own analysis to decide whether the stock could meet the analysts price targets.

When will UNH stock split?

UnitedHealth has not announced any plans for a stock split lately.

Markets in this article

UNH
Unitedhealth
558.65 USD
-7.53 -1.330%

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