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UnitedHealth Rallies on Q1 Earnings: Time to Buy?

April 18, 2017

Today was a big day for UnitedHealth Group (UNH). UNH shares climbed after the company made some game-changing announcements. This has people asking me whether there's still time to buy the health insurer, so let's dig into the details.

First, the country's largest health insurer announced strong results for the first quarter. Compared with Q1 2016, revenues rose 9.4% to $48.7 billion. This was slightly higher than analysts' estimates of $48.3 billion in revenue. While all of UnitedHealthcare's domestic businesses posted solid revenue growth, its OptumHealth business stood out with 18.4% annual growth.

Meanwhile, earnings from operations jumped 15% year-on-year to $3.4 billion. Adjusted earnings per share increased 31% to $2.37; this beat the $2.17 consensus EPS estimate by 9.2%.

Pleased with these results, UnitedHealth Group lifted its outlook for 2017. Management is now targeting sales of $200 billion and adjusted earnings of $9.65 to $9.85 per share. This is above the Street view of $198.9 billion in revenue on $9.51 EPS.

So, on an otherwise down day for the market, UNH shares are in the green. UNH remains one of my top healthcare plays. With a dividend yield of 1.5%, it trades at less than 16 times forecasted earnings.

For all of these reasons, UNH earns a B-rating in Portfolio Grader and an A-rating in Dividend Grader. There aren't that many stocks that earn top marks in both of my stock screening tools, so UNH is a solid buy.

Sincerely,

Louis Navellier

Louis Navellier

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