UnitedHealth Group (UNH) is the worst Dow Jones stock Thursday, putting pressure on the price-weighted index, after the health insurance company reported mixed results for its fourth quarter.
In the three months ending December 31, UnitedHealth's revenue increased 6.8% year over year to $100.8 billion, thanks in part to a 4.4% rise in premiums to $76.5 billion. Its earnings per share (EPS) were up 10.6% from the year-ago period to $6.81.
"The people of UnitedHealth Group remain focused on making high-quality, affordable healthcare more available to more people while making the health system easier to navigate for patients and providers, positioning us well for growth in 2025," said UnitedHealth CEO Andrew Witty in a statement.
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While the company's earnings topped the $6.72 per share that Wall Street was anticipating, UNH's revenue fell short of the $101.8 billion analysts called for, according to CNBC. This marks the first top-line miss for UnitedHealth since Q2 2020. Revenue from premiums also came in below expectations of $78.1 billion.
Additionally, UnitedHealth reaffirmed the 2025 outlook it provided last month, which calls for revenue in the range of $450 billion to $455 billion and earnings per share between $29.50 to $30.
Is UnitedHealth stock a buy, sell or hold?
UnitedHealth has underperformed the broad market over the past 12 months, up 6% on a total return basis (price change plus dividends) vs the S&P 500's 26% gain. But Wall Street remains overwhelmingly bullish on the blue chip stock.
According to S&P Global Market Intelligence, the average analyst target price for UNH stock is $639.16, representing implied upside of more than 20% to current levels. Additionally, the consensus recommendation is a Strong Buy.
Financial services firm Oppenheimer has an Outperform rating (equivalent to a Buy) on UNH stock with a $640 price target.
"We believe UNH is well positioned by virtue of its diversification, strong track record, elite management team, and exposure to certain higher growth businesses," wrote Oppenheimer analyst Michael Wiederhorn in a December 5 note.
He adds that UnitedHealth's Optum business "is a nice complement to its core managed care operations and continues to account for a large share of earnings" and its "vertical integration strategy strengthens the company's competitive positioning across many areas of the healthcare landscape."
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