UnitedHealth shares gain the most in two months on Wednesday, fourth-quarter earnings top estimates supported by Optum unit

UnitedHealth Group Inc’s (UNH) quarterly earnings, reported on Wednesday, exceeded Wall Street estimates, supported by revenue growth at its Optum unit.

UnitedHealth shares closed higher for a second consecutive trading session in New York on Wednesday. It has also been the sharpest daily surge since November 15th. The stock went up 2.83% ($8.17) to $296.41, after touching an intraday high at $299.64, or a price level not seen since December 20th ($300.00).

Shares of UnitedHealth Group have risen 0.83% so far in 2020 compared with a 1.81% gain for the benchmark index, S&P 500 (SPX).

In 2019, UnitedHealth Group’s stock went up 18.01%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.

Total revenue went up 4.2% year-on-year to $60.90 billion during the quarter ended on December 31st.

Revenue from Optum, the unit engaged in drug benefits management and healthcare data analytics services, went up 8% year-on-year to $29.8 billion during the quarter.

Net income attributable to shareholders surged to $3.54 billion ($3.68 per share) during the quarter ended on December 31st from $3.04 billion ($3.10 per share) in the same period a year ago.

Meanwhile, earnings per share, which exclude special items, were reported at $3.90 during the latest quarter. The figure compares with a consensus of estimates pointing to adjusted earnings of $3.78 per share.

The US health insurer reiterated its full-year 2020 adjusted earnings forecast of $16.25 to $16.55 per share.

Analyst stock price forecast and recommendation

According to CNN Money, the 25 analysts, offering 12-month forecasts regarding UnitedHealth Group Inc’s stock price, have a median target of $339.00, with a high estimate of $366.00 and a low estimate of $279.00. The median estimate represents a 14.37% upside compared to the closing price of $296.41 on January 15th.

The same media also reported that at least 21 out of 27 surveyed investment analysts had rated UnitedHealth Group Inc’s stock as “Buy”, while 5 – as “Hold”.

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