UnitedHealth (UNH), one of the prominent players in the health insurance space, is scheduled to announce its second-quarter earnings on July 29. The stock has dropped 43.8% year-to-date, hit by several issues, including the suspension of its guidance, escalating medical costs, and a leadership shakeup that included the sudden departure of its CEO, Andrew Witty. Wall Street analysts expect the company to report earnings per share of $4.48, representing a 34% decrease year-over-year.
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Meanwhile, revenues are expected to increase by 13% from the year-ago quarter to $111.5 billion, according to data from the TipRanks Forecast page. It’s important to note that UNH has an impressive track record with earnings, having exceeded EPS estimates in eight out of the past nine consecutive quarters.
Recent News Ahead of Q2
On July 24, UnitedHealth Group (UNH) revealed in an SEC filing that it is under formal investigation by the Department of Justice (DOJ) over its Medicare billing practices. The company said it is cooperating with both civil and criminal probes into whether it improperly raised patient diagnoses to secure higher payments from the government.
J.P. Morgan analyst Lisa Gill remains optimistic ahead of UnitedHealth’s earnings, viewing the DOJ probe as part of a broader industry trend. She maintained an Overweight rating on the stock, expecting a potential rebound despite near-term uncertainty.
Analyst’s Views Ahead of UNH’s Q2 Earnings
Heading into the Q2 print, Deutsche Bank analyst George Hill lowered his price target to $328 from $362 but reiterated a Buy rating. The analyst noted that investor sentiment “has deteriorated significantly” due to a series of unfavorable news. The top-rated analyst lowered his estimates, citing ongoing concerns around Optum Health, the company’s healthcare services unit.
Also, Leerink Partners analyst Whit Mayo lowered the price target for UNH stock to $340 from $355 and reiterated a Buy rating. He remains “cautiously optimistic” about the stock heading into Q2 earnings, given the challenging backdrop.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry; the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 7.97% move in either direction.
Is UNH a Good Buy Now?
Turning to Wall Street, UNH stock has a Moderate Buy consensus rating based on 18 Buys, five Holds, and one Sell assigned in the last three months. At $348.12, the average UnitedHealth stock price target implies a 23.86% upside potential.
