On Thursday, UnitedHealth Group (UNH) is scheduled to release its second-quarter earnings. The company will release its earnings before the market opens. Analysts expect the company’s revenues to be $60.59 billion in the second quarter—a rise of 8.03% YoY (year-over-year). In addition, the non-GAAP EPS will likely be $3.45—a rise of 9.94% YoY. In the first quarter, UnitedHealth Group reported revenues of $60.31 billion—an increase of 9.28% YoY. The company’s non-GAAP EPS was $3.73—an increase of 22.70% YoY. To learn more, read UnitedHealth Group: Analysts’ Ratings after Its Q1 Results.
UnitedHealth Group has a long history of earnings surprises. Notably, the company beat the consensus non-GAAP EPS estimate for the past 16 quarters. As a result, the company has a strong history of revenue surprises. However, UnitedHealth Group missed the consensus estimate two times in the last 16 quarters.
Share price movements
On July 15, UnitedHealth Group closed at $265.96. Overall, the company was 9.61% higher than its closing price on July 1. The share prices could be rising due to investors’ optimism before the company’s second-quarter earnings.
The Trump administration withdrew the proposal to abolish rebates paid by drug manufacturers to pharmacy benefit managers. Read This Rebate Decision Saw Health Insurers Soar Yesterday to learn more.
Among health insurance stocks, UnitedHealth Group wasn’t impacted much by the lawsuit news. The lawsuit debates whether the Affordable Care Act is constitutional. To know more, read Healthcare Stocks to Watch Amid the ACA Constitutionality Debate.
Fiscal 2019 guidance
For fiscal 2019, UnitedHealth Group expects revenues of $243 billion–$245 billion and operating earnings of $18.8 billion–$19.4 billion. The company expects cash flows of $17.3 billion–$17.8 billion and an adjusted EPS of $14.50–$14.75 for fiscal 2019.
By the end of fiscal 2019, UnitedHealth Group expects to serve 49.7 million members through UnitedHealthcare—its health care benefits business. The company expects UnitedHealthcare’s revenues to be $195 billion–$197 billion in fiscal 2019. Among the revenues, Medicaid, Medicare, and Employer and Individual businesses will account for $45.0 billion, $83.0 billion, and $57.0 billion, respectively.
The company expects the OptumHealth business to report revenues of $28.0 billion in fiscal 2019—a five-year CAGR (compound annual growth rate) of 21%. OptumInsight will likely report revenues of $10.3 billion in fiscal 2019, which is a five-year CAGR of 19%. Likewise, OptumRx could report revenues of $75 billion in fiscal 2019—-year CAGR of 18%. Finally, the company’s fiscal 2019 global revenues will likely be $10.3 billion, which is a five-year CAGR of 9%.
UnitedHealth Group’s valuation
Currently, UnitedHealth Group is trading at a PE ratio of 20.65x. The company’s ratio is lower than Humana, Centene, and Wellcare Health Plans. However, United Health’s ratio is higher than Anthem, Cigna, and Molina Healthcare.
The 26 analysts tracking UnitedHealth Group have an average target price of $289.61 on the stock. Overall, the target price indicates a potential upside of 8.89% in the next 12 months.