Buy, Sell, Or Hold UNH Stock At $510?

Core Viewpoint - UnitedHealth Group reported Q4 results with revenues missing expectations but earnings exceeding them, leading to a decline in stock price due to rising medical costs [1][3]. Financial Performance - Q4 revenue was $100.8 billion, reflecting a 7% year-over-year growth, with UnitedHealth and Optum segments growing 5% and 9% respectively [2]. - Adjusted earnings per share (EPS) were $6.81, compared to $6.16 in the prior year quarter [2]. Medical Costs and Ratios - The medical care ratio was reported at 87.6%, up from 85% in the prior-year quarter, exceeding consensus estimates of a 100 basis points increase [2]. - The company anticipates elevated medical costs to persist in 2025, which is factored into the earnings outlook of $29.50 to $30.00 per share [3]. Stock Performance - UNH stock has declined 1% since the beginning of 2024, contrasting with a 25% rise in the S&P 500 index [4]. - Over the last four years, UNH stock performance has been volatile, with returns of 45% in 2021, 7% in 2022, 1% in 2023, and -2% in 2024 [4]. Valuation Perspective - At a current price of $510, UNH trades at 17 times forward expected earnings of $29.75, compared to its average P/E ratio of 21 times over the last three years, indicating potential for growth [6].