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• UnitedHealth reported its financial results for Q4 on Friday.
• Three experts share their respective views on UnitedHealth stock.
• $UNH is now trading about 5.0% below its 52-week high.

UnitedHealth Group Inc (UNH) is down 3.0% today even though it reported market-beating results for its fiscal fourth quarter.

Why is UnitedHealth stock down on Friday?

Investors are concerned primarily because managed care company saw higher-than-expected medical costs in Q4.

Its medical loss ratio or “MLR” came in at 85% for the recently concluded quarter versus analysts at 84.1%. According to Mizuho analyst Jared Holz:

We do not think managed care stocks can outperform the market when MLR trends are this high.

The health stock is now trading about 5.0% below its 52-week high.

UnitedHealth Group Q4 stuff. My puts and takes:

Big theme for them was 'we can drive sustainable growth' and downplaying threats of rising outpatient utilization.

Highlights:

• 4.1M members in VBC arrangements
• Margin declining as Optum acquires / integrates chunks of new… pic.twitter.com/cAbPtlhhva

— Blake Madden 🏥 (@B_Madden4) January 12, 2024

Should you buy $UNH on weakness?

UnitedHealth earned $3.1 billion from its managed care operations in the fourth quarter that missed Street estimates by some $300 million.

But its revenue from Optum came in well ahead of expectations at $59.5 billion on Friday. Scott Nations of Nations Indexes said today on CNBC’s “Power Lunch”:

It’s a buy. We shouldn’t be surprised that there’s inflation in healthcare costs. But the company still beat on EPS. Isn’t that the definition of a well-managed company.

Wall Street currently has a consensus “overweight” rating on shares of UnitedHealth Group Inc.

Notable figures in UnitedHealth’s Q4 earnings

• Earned $5.5 billion versus the year-ago $4.8 billion
• Adjusted EPS printed at $6.16 as per the press release
• Revenue jumped 14% year-on-year to $94.4 billion
• Consensus was $5.98 a share on $92.1 billion in sales
• Net margined remained flat at 5.8% in its fiscal Q4

On Friday, UnitedHealth reiterated its guidance for $27.50 to $28 of per-share earnings (adjusted) on up to $403 billion of revenue in 2024. Courtney Garcia – senior wealth advisor at Payne Capital Management also told CNBC today:

You want to look at this optimistically. We have an aging population, that’s going to benefit them. Concerns of additional costs, I think a lot of those are one-time things.

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