Worsening Earnings for UnitedHealth: Analysing UNH Stock Movements in Current Scenario
UnitedHealth Group (UNH) recently released its quarterly results, providing an update on its earnings guidance for 2025. The company's shares have been experiencing a downturn since early April, with a current drop of over 55% from its year-to-date high.
Despite the challenges faced, UnitedHealth reported better-than-expected revenue for its second quarter on Tuesday. The company anticipates revenue growth of more than 15% over 2024, with expectations ranging between $445.5 billion and $448.0 billion.
However, the earnings forecast remains below market expectations. UnitedHealth's expected earnings for 2025 are at least $14.65 per share (net earnings) and adjusted earnings of at least $16.00 per share. This guidance falls well below the average Wall Street estimate for adjusted earnings, which stood at $20.40 per share, significantly higher than UnitedHealth's updated guidance.
The company's medical care ratio is expected to fall between 89% and 89.5% this year, similar to the 89.4% recorded in the second quarter.
UnitedHealth's shares have been impacted by the confirmation that its Medicare billing practices are under investigation by the Department of Justice (DOJ). This confirmation led to a 5% loss on July 29, adding to the ongoing decline in UNH shares.
Despite these concerns, Wall Street firms haven't yet thrown in the towel on UnitedHealth stock due to an attractive valuation. UnitedHealth shares are currently trading at a historically low price-sales (P/S) ratio of 0.64x. At the time of publication, analysts had a consensus "Moderate Buy" rating on UNH shares with a mean target of about $355. This indicates potential upside of more than 30% from current levels for UnitedHealth shares.
However, persistent cost pressures may restrict margin expansion and cause prolonged profitability-related challenges for UnitedHealth. The company does expect to return to earnings growth in 2026.
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[1] UnitedHealth Group Earnings Release, July 29, 2025. [2] UnitedHealth Group Q2 2025 Earnings Call Transcript, July 29, 2025. [3] UnitedHealth Group 2025 Guidance Update, July 29, 2025. [4] Wall Street Journal, UnitedHealth Group Lowers 2025 Earnings Outlook, July 29, 2025.
[1] Although the stock market has been volatile, investors may consider diversifying their health-and-wellness portfolio by looking into UnitedHealth Group, especially given the attractive valuation in the finance sector with a current price-sales ratio of 0.64x.
[2] Concurrently, interested individuals in science, particularly in the field of healthcare, might want to keep an eye on UnitedHealth Group's earnings growth and progress in overcoming cost pressures to maintain the company's profitability in 2026.
