UnitedHealth Group Inc (NYSE: UNH), on Friday, reported market-beating results for its fiscal first quarter and raised its guidance for the full year. Shares still ended about 3.0% down.
Why is UnitedHealth stock down then?
The stock slipped primarily because the healthcare behemoth said lower-than-expected Medical Advantage rates for 2024 could be a nuisance.
Based on the expressed concern, Shelby McFaddin of Motley Fool Asset Management said, at best, she’d rate the UnitedHealth stock only at “hold” for now.
Medical reimbursement rates affect the entire industry. UNH can’t do anything to control the government, those decisions. So, I’ll hold and see if they can show me that they’ll be the best in class while everyone is dealing with this.
UNH fundamentals continue to be strong
“MCR” – the medical care ratio climbed to 82.2% in the recently concluded quarter, a 220-bps increase versus a 250-bps increase expected. Remember that lower MCR suggests greater profitability for an insurance business.
Operating cost ratio also climbed a more than expected 60 basis points to 14.8%. Still, McFaddin agreed on CNBC’s “Power Lunch”:
The fundamentals, otherwise, look really strong. The business is really strong. They’re very competitive. They had a really great quarter, beat and raise.
It’s also noteworthy that Wall Street currently has a consensus “buy” rating on the UnitedHealth stock.
UnitedHealth Q1 earnings and future guidance
- Bancolombia to launch WeniaCard to facilitate cryptocurrency payments
- Bitcoin rebounds as MOODENG, NEIRO, SUI, and POPCAT skyrocket; Hamster Kombat struggles
- UK PM Keir Starmer initiates government overhaul less than 100 days into office amid policy challenges
- Forex Expo Dubai 2024 Breaks Records with Unprecedented Attendance and Sponsors
- Insider Information: Kojamo’s CEO Jani Nieminen resigns
The healthcare stock may also be down because the raised guidance still came in shy of Street estimates. For the full year, the Minnetonka-headquartered firm now forecasts $24.50 a share to $25 a share of adjusted earnings. In comparison, analysts were at $24.93 per share.
For the year, UnitedHealth shares are down just over 1.0% at writing.
Source : https://invezz.com/news/2023/04/15/should-you-buy-unitedhealth-stock-on-raised-guidance/