UnitedHealth Group Inc UNH reported on Tuesday upbeat earnings for its third quarter.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

RBC Capital Markets On UnitedHealth Group

Analyst Ben Hendrix reiterated an Outperform rating while reducing the price target from $615 to $595.

UnitedHealth reported its third-quarter adjusted earnings at $7.15 per share, beating the consensus of $7, "reflecting broad-based growth in consumers served and operating efficiency gains," Hendrix wrote in a note. The gains were partially offset by medical costs that exceeded expectations by around 80 basis points (bps), he added.

Among the reasons for higher-than-anticipated medical costs, management cited "a ~20% upshift in Medicare coding intensity among certain hospital systems," the analyst stated. He lowered the earnings estimate for 2025 from $30.84 per share to $29.75 per share.

Stephens On UnitedHealth Group

Analyst Scott Fidel maintained an Overweight rating while cutting the price target from $632 to $605.

Management suggested the adjusted earnings in 2025 could be at the high end of the initial guidance, which likely matches $30 per share, Fidel said. Although this is 8.6% higher than the midpoint of the 2024 guidance, it is below the Street’s projection of $31.17 per share, he added.

"UNH hopes to initiate guidance with the capacity to drive positive revisions throughout 2025. UNH emphasized 3Q24 pressure points pertaining to the Medicaid redeterminations-driven rate/acuity mismatch, higher-than-expected hospital coding intensity in MA, and pull forward impacts from the IRA resulting in accelerated specialty Rx trends," the analyst wrote.

Cantor Fitzgerald On UnitedHealth Group

Analyst Sarah James reaffirmed an Overweight rating while slashing the price target from $644 to $591.

"We are walking away from 3Q24 earnings with the sentiment that the vast majority of the unknowns have been cleared up," James wrote in a note.

The Medical Loss Ratio (MLR) was worse than expected and this could escalate in the fourth quarter, the analyst stated. The stock sell-off post UnitedHealth's earnings release appears "overdone" and presents an opportunity to buy, she added.

Check out other analyst stock ratings.

Truist Securities On UnitedHealth Group

Analyst David MacDonald reiterated a Buy rating while reducing the price target from $640 to $625.

UnitedHealth reported mixed results for the third quarter, with adjusted earnings topping consensus expectations, despite MLR coming in at 85.2%, worse than consensus of 84.4%, MacDonald said. The company tightened its fiscal 2024 guidance to $27.50-$27.75 per share, versus the prior $27.50-$28.00 per share, he added.

The higher-than-expected MLR was due to "a handful of lingering pressures (increase in hospital coding intensity, Medicaid rate/acuity mismatches tied to the wind-down of redeterminations) mentioned in 2Q," the analyst stated. The company provided conservative initial guidance for 2025 due to "the fluid environment," he further wrote.

KeyBanc Capital Markets On UnitedHealth Group

Analyst Matthew Gillmor maintained an Overweight rating while cutting the price target from $675 to $650.

UnitedHealth's third-quarter results were "disappointing, primarily highlighted by higher medical costs and an initial EPS outlook for 2025 that was below expectations," Gilmor said.

There had been optimism around the company being able to accelerate earnings growth in 2025 to the long-term targets, the analyst stated. "However, ongoing headwinds (mostly MA related), along with UNH’s decision to maintain organic investments, likely push out this thesis until 2026," he added.

Oppenheimer On UnitedHealth Group

Analyst Michael Wiederhorn reaffirmed an Outperform rating and price target of $610.

UnitedHealth's MCR missed expectations by around 100 bps due to persistent hospital coding pressure, continued Medicaid rate/acuity mismatches, and higher drug costs, Wiederhorn said. "Some extreme hospitals are upcoding up 20%+," he added.

"UNH is seeing elevated utilization of high-cost-specialty prescriptions (auto-immune, cancer, cardio) as beneficiaries take advantage of the 2024 changes from the Inflation Reduction Act (IRA) at a greater rate than UNH expected," the analyst wrote. "However, management feels appropriately priced for 2025 (bids submitted in June) when the 2025 IRA changes more significantly shift the cost burden onto plans, with higher upfront premiums," he further stated.

UNH Price Action: Shares of UnitedHealth Group had risen by 3.29% to $574.40 at the time of publication on Wednesday.

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