Key Factors
With shares in rebound mode, UnitedHealth Group supplied a double increase for the market.
The impacts of the cyber assault had been lower than feared.
The underlying enterprise is stable and money circulate is substantial. 
5 shares we like higher than UnitedHealth Group
UnitedHealth Group’s NYSE: UNH Q1 outcomes had been higher than anticipated for 2 causes: First, the inventory value is now rebounding from long-term lows and deep worth territory with ample upside forward. Second, UnitedHealth analysts see it advancing greater than 20% on the present consensus, and consensus could go larger as a result of it is cautious. 
The consensus estimate moderated forward of the Q1 launch due to fears that proved to be excessive. Now analysts must rework their estimates and certain revise value targets to be larger. As a result of outcomes assist the market and the inventory has worth and yield, bullish momentum might simply take this inventory value to the excessive finish of the analysts’ vary. That will put it again on the pattern that started in 2020. Get UnitedHealth Group alerts:Signal Up
UnitedHealth Cyber Assault Influence Is Much less Than Feared
UnitedHealth Group’s outcomes are good due to underlying enterprise energy and a less-than-expected influence from the current cyber assault. The corporate reported $99.79 billion in internet income for a acquire of 8.6% over final yr, outpacing the consensus by 50bps. Whereas 50bps is a slim margin, outcomes might have been far worse given the scope of the assault. Optum grew quickest segmentally at 13% and was offset by slower progress within the core UnitedHealth phase. UnitedHealth’s progress was primarily pushed by a rise within the variety of shoppers served. 
The GAAP margin was deeply impacted by the sale of Brazil operations and the cyberattack. The influence of the Brazilian operations is primarily non-cash associated to FX-translation losses; the cyber assault’s influence is quantified at 74 cents per share, together with 49 cents in direct response efforts and 25 cents in enterprise disruption.
After adjusting for the results of Brazil and direct response, however not enterprise disruption, the web working margin is flat in comparison with final yr, and the EPS is above consensus. The $6.91 outpaced the consensus reported by Marketbeat by 29 cents and is compounded by improved steerage. UnitedHealth issued favorable steerage. The corporate expects adjusted earnings from $27.50 to $28 in comparison with the analysts’ consensus of $27.53.
UnitedHealth’s Money Circulate and Capital Returns Are Wholesome
The cyber assault negatively impacted money circulate in Q1 and can this yr, however the results are restricted, lower than anticipated, and can diminish as quickly as the present quarter closes. Regardless, the corporate’s money circulate in Q1 was adequate to climate the storm. Stability sheet highlights embody a money construct offset by a rise in debt and legal responsibility and a single-digit decline in fairness. The web result’s leverage close to 2x money and 0.7x fairness, each fortress-quality, permitting for dividends and share repurchases. 
The dividend is above the broad market common, yielding about 1.7%. The payout ratio is low at 30% and compounded by share repurchases. The repurchases in Q1 introduced the common adjusted share rely down 1.4% and are anticipated to proceed this yr. A distribution enhance can also be probably. UNH has elevated for 14 consecutive years and is on monitor to make the subsequent enhance when it declares a cost. 
UnitedHealth Group Confirms a Backside
The value motion in UnitedHealth Group superior greater than 5% following the discharge to verify a backside at $450. The market is in rebound mode and more likely to transfer larger. There’s some resistance on the $480 stage and short-term 30-day EMA, however it could not final lengthy. A break above that stage might take the market as much as $500 or $520, the place resistance could also be substantial. 
The long-term outlook is sweet. UnitedHealth ought to resume its long-term uptrend from that time as a result of insurance coverage business developments, margins and capital returns. The query is that if it’ll pattern reasonably larger from this stage or surge to the highest of the analysts’ vary and realign with a earlier pattern. 
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