Ahead of Q4 earnings, UnitedHealth Group (UNH) shows a clear split between Seeking Alpha’s Quant (“Hold”) and Wall Street (“Buy”) ratings.
Seeking Alpha’s Quant model maintains a Hold rating, citing growth challenges and weak momentum. UNH’s growth metrics reveal challenges, particularly with EPS forward growth at -9%, significantly below the sector at 9.4%. While CAPEX growth shows an improvement of 1% compared to the sector’s decline, overall growth outlook is not promising, the model suggests.
Stock momentum also lags, with UNH shares down 33.3% over the past year, making it the worst-performing stock in the Dow 30 during that period. UNH shares are already down 8.6% premarket on Tuesday ahead of the Q4 results.
SA columnist Brett Ashcroft Green points to margin pressure as the key concern for UNH: “Operating margins are now the lowest in 25 years….The company has been under scrutiny about case denial rates, and thus, we could assume the company’s margins are being hurt due to the easing of case denial rates.”
On the other hand, Wall Street remains optimistic with a Buy recommendation, with an average price target of $393.77, implying a nearly 12% upside. Analysts expect the Eden Prairie, Minnesota-based firm to post EPS of $2.11 (-69.07% Y/Y), while revenue is expected to grow 12.8% to $113.73B. UNH’s earnings revisions present a mixed picture, with 13 upward revisions and 10 downward revisions in the past three months.