Is UnitedHealth Group Stock a Buy After Earnings?

outside of unitedhealthcare building in Phoenix, Arizona — (Image credit: PATRICK T. FALLON/AFP via Getty Images)

UnitedHealth Group (UNH) is the best Dow Jones stock Tuesday after the health insurance giant topped analysts' expectations for its second quarter.

In the three months ended June 30, UnitedHealth's revenue increased 6.4% year-over-year to $98.9 billion, thanks in part to a 6.1% rise in premiums to $76.9 billion. UNH's earnings per share (EPS) were up 10.7% from the year-ago period to $6.80.

These results "reflect diversified and durable growth, and a commitment to ensuring high quality care is available to every person we are privileged to serve," UnitedHealth CEO Andrew Witty said on the company's conference call. "In the first half of the year, revenues grew by nearly $14 billion, with strong contributions from across the enterprise, led by double-digit growth at Optum. UnitedHealth Group enters the second half of the year with continuing and broad-based growth momentum."

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UnitedHealth's top- and bottom-line results came in ahead of analysts' expectations. According to Yahoo Finance, Wall Street was anticipating revenue of $98.8 billion and earnings of $6.66 per share.

The company also said that the total number of people served by its domestic commercial offerings increased 8.8% year-over-year to 29.6 million, while the total number of people served by its Medicare Advantage plans was up 2.3% to 7.8 million.

As a result of its performance in the first half of the year, UnitedHealth affirmed its full-year outlook, which calls for EPS to arrive between $27.50 to $28 – a range that satisfies analysts' expectations for earnings of $27.59 per share.

Should investors buy UnitedHealth after earnings?

While the decision on whether investors should buy UNH stock after earnings is ultimately their own and dependent upon their personal goals, Wall Street is overwhelmingly bullish toward the blue chip stock.

According to S&P Global Market Intelligence, the average analyst target price for UNH is $576.35, representing implied upside of nearly 6% to current levels. Additionally, of the 28 analysts that cover the stock, 19 rate it a Strong Buy, eight rate it a Buy and one rates it a Hold. This works out to a consensus recommendation of a Strong Buy.

Speaking for the bulls is Truist Securities analyst David MacDonald, who has a Buy rating and $600 price target on UNH. Thanks to strong cash flow generation and meaningful financial flexibility, MacDonald expects "the company's strong financial footing to continue to drive a virtuous cycle of fueling ongoing growth investment in the core business, expansion of capabilities, M&A and shareholder value creation."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.