Yahoo Finance UnitedHealth Group Incorporated (NYSE:UNH) Just Released Its First-Quarter Earnings: Here's What Analysts Think
Last week saw the newest first-quarter earnings release from UnitedHealth Group Incorporated (NYSE:UNH), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of US$64b were in line with what the analysts predicted, UnitedHealth Group surprised by delivering a statutory profit of US$3.52 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for UnitedHealth Group
Following the latest results, UnitedHealth Group's 18 analysts are now forecasting revenues of US$258.9b in 2020. This would be a reasonable 5.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 6.0% to US$15.37. In the lead-up to this report, the analysts had been modelling revenues of US$259.0b and earnings per share (EPS) of US$15.42 in 2020. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$326. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values UnitedHealth Group at US$371 per share, while the most bearish prices it at US$283. This is a very narrow spread of estimates, implying either that UnitedHealth Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that UnitedHealth Group's revenue growth will slow down substantially, with revenues next year expected to grow 5.1%, compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.7% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than UnitedHealth Group.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for UnitedHealth Group going out to 2024, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for UnitedHealth Group you should be aware of.
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