UnitedHealth: Despite Tragedy, Transition Should Be Smooth

Key Morningstar Metrics for UnitedHealth Group

UnitedHealth Group’s UNH annual investor day on Dec. 4, 2024, was lower quick by the deadly capturing of Brian Thompson, the corporate’s medical insurance coverage phase chief. Thompson had led this phase, which insures extra Americans than some other firm, for 3 years. He was a 20-year veteran of the corporate, with earlier expertise main the phase’s authorities plans. Citing police, The New York Times reported that the capturing appeared focused, though particulars are scarce presently.

From a company viewpoint, traders ought to know that UnitedHealth’s administration bench is usually fairly deep. We count on the corporate to easily transition Thompson’s function to an inner candidate beneath the route of CEO Andrew Witty.

Before the capturing, UnitedHealth delivered a near-term view of its monetary prospects roughly in step with our estimates. However, to acknowledge latest money flows and a barely greater outlook for long-term progress past our express forecast interval, which we predict higher displays the agency’s high-quality companies and exemplary capital allocation, we’re boosting our honest worth estimate to $590 per share from $550. Shares nonetheless commerce near our honest worth estimate.

UnitedHealth’s near-term steerage stays in step with the projections previewed on its third-quarter earnings name, and our estimates look near these targets. For 2024, the agency nonetheless expects 9%-10% progress in adjusted EPS to $27.50-$27.75, regardless of absorbing $0.75 per share from Change-related enterprise disruption results. For 2025, the agency expects mid-to-high-single-digit adjusted EPS progress to $29.50-$30.00, barely decrease than our estimate. We stay snug with our greater view, particularly since UnitedHealth often exceeds its preliminary expectations.