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UNH Stock Just Popped to New 4-Month Highs, But This Analyst Warns UnitedHealth Could Still Fall 20% From Here
Yahoo Financeยท 2025-09-15 17:59
Core Insights - UnitedHealth's recent quarterly results showed a mixed performance with revenues increasing by 12.9% year-over-year to $111.62 billion, while earnings per share declined by 40% to $4.08, missing expectations [1][7] - The company has cut its revenue outlook for the year to between $445.5 billion and $448.0 billion, and earnings per share projections have also been significantly reduced [8] Financial Performance - Revenues for the quarter reached $111.62 billion, marking a 12.9% increase year-over-year [1] - Optum, contributing over 60% of total revenues, reported sales of $67.2 billion, up 6.8% from the previous year [1] - Earnings per share of $4.08 represented a 40% decline from the prior year and fell short of the expected $4.45 [7] - Cash flow from operating activities was $12.6 billion for the first half of the year, a more than 60% increase year-over-year, with a cash balance of $32 billion [9] Market Position and Valuation - UnitedHealth is valued at a market cap of $319.3 billion, making it the largest insurer in the U.S., with a dividend yield of 2.41% [3] - The company has consistently raised dividends for 15 years, with a recent increase of 5% to $2.21 per share [3] - Despite a year-to-date decline of 30.3% in share price, Warren Buffett purchased approximately 5 million shares for about $1.6 billion, indicating confidence in the stock [5][6] Strategic Initiatives - UnitedHealth is transitioning from a traditional fee-for-service model to value-based care, leveraging patient data for tailored treatment plans [10] - The company is investing in artificial intelligence initiatives expected to save nearly $1 billion annually by fiscal 2026, enhancing operational efficiency [11] - Optum is identified as a key growth driver, with segments like Optum Rx and Optum Health expanding significantly, and Optum Insight's operating profit increased by 83% year-over-year [12] Analyst Ratings - Analysts have assigned a "Moderate Buy" rating for UNH stock, with a mean target price of $316.29, and a high target price of $440 indicating a potential upside of about 25% [14]