UnitedHealth Reports 'Noisy' Quarterly Results: 5 Analysts Weigh In On 'Compelling Levers Of Improvement' For 2025

Shares of UnitedHealth Group Inc UNH were climbing in early trading on Wednesday, after the company reported its second-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

• RBC Capital Markets analyst Ben Hendrix reiterated an Outperform rating, while lifting the price target from $555 to $615.
• Goldman Sachs analyst Nathan Rich maintained a Buy rating, while raising the price target from $596 to $642.
• Truist Securities analyst David MacDonald maintained a Buy rating and price target of $640.
• Cantor Fitzgerald analyst Sarah James reiterated an Overweight rating and price target of $591.
• Oppenheimer analyst Michael Wiederhorn reaffirmed an Outperform rating and price target of $610.

Check out other analyst stock ratings.

RBC Capital Markets: UnitedHealth Group reported solid second-quarter earnings of $6.80 per share, surpassing consensus of $6.66 per share, Hendrix said in a note. Although the quarterly results were "noisy," Medicare momentum "appears to be building," he added.

Management reiterated their 2024 adjusted earnings guidance between $27.50 and $28.00 per share, with most of the earnings coming in the second half of the year, the analyst stated. "With prior authorization fully back in place as of mid-April, claims backlogs addressed, and no indication of accelerating core Medicare Advantage trend through May and June, we believe that visibility has markedly improved," he further wrote.

Goldman Sachs: "While the 2Q fundamental update was mixed and contained several moving pieces, the drivers of the 2Q MCR pressure seem largely contained to 2024," Rich wrote in a note.

Management reiterated their 2024 adjusted earnings guidance, "while absorbing a 50bp higher MCR and $0.30 of additional Change impact," the analyst stated. The 2024 guidance indicates that there are "compelling levers of EPS improvement coming into focus for 2025," he further said.

Truist Securities: UnitedHealth's second-quarter results reflected "solid core trends," MacDonald said.

"We also see an increasingly favorable setup in 2025 as most of Change services are restored, the company has provided $9B + of no cost loans/advanced payments to help providers mitigate the impact and are targeting a return to baseline performance from Change in 2025," the analyst wrote. "In addition, we expect continued brisk growth in VBC, see a sizable growth/efficiency opportunity around AI/tech innovation and financial flexibility remains a key differentiator," he added.

Cantor Fitzgerald: The stock rally post second-quarter results reflects low expectations heading into the quarter as well as "optimism on the bridge to 2025," James said.

There are several catalysts for upside to the company's 2025 performance, including "SG&A, Optum health run rate margins, share repo, non-repeat of Change headwinds, and a conservative bid strategy for MA MLR," the analyst stated. "While we anticipate management is likely to keep guidance conservative, we see potential for the year to perform at the high end or above the 13-16% LT growth guidance," he added.

Oppenheimer: "UNH reported strong Q2:24 results, and appears right on track, as it moves past the Change Healthcare challenges during 2024," Wiederhorn wrote. Although several factors impact MCR in 2024, "the company expects to return to earnings baseline assumptions in 2025," he added.

"Given the stable underlying trends and an increasingly favorable political outlook, we would be buyers of UNH at these still-discounted valuations," the analyst stated.

UNH Price Action: Shares of UnitedHealth Group had risen by 4.41% to $573.07 at the time of publication on Wednesday.

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