- UnitedHealth Group outperformed in Q4.
- Guidance for 2023 is mixed.
- Long-term trends are bullish, but short-term action could be sideways until later in 2023.
The shares of UnitedHealth Group (NYSE: ) will follow the guide Q4 and 2023, but the bottom may not be in. The results were better than expected, but the outperformance was slim, and the drive was mixed. The recovery for investors is that a fund can be in, but there is a risk that the stock could also fall to a new low.
But that’s the short story. The long-term story is that UnitedHealth Group continues to grow and penetrate its markets with more depth which is a double tailwind for the stock. This can be seen in the graphs, which show the downward pressure. This means that UnitedHealth Group is a Hold and will become a Buy once the fund has been confirmed.
UnitedHealth Group outperforms in Q4
UnitedHealth Group outperformed in Q4, but that’s a top-line statement. The company posted $82.8 billion in net income for a gain of 12.3% versus last year, and beat the consensus by 32 basis points or about 0.3%. The strength is good to see and should help support the price action, but it is not a catalyst for the rally.
In this, both segments saw double-digit growth, with UnitedHealth leading the way. There was a slight increase in medical care costs on an earnings basis, but efficiency improvements offset that. Operating margin improved by 90 basis points and net margin by 30 to drive the outperformance in the bottom line. The caveat is that the bottom line is as slim as the front line and the drive is mixed.
Earnings of $5.34 are up 17% from last year, which is good news. The bad news is that this is not yet a strong catalyst for the rally and may not lead to higher prices immediately. As for guidance, the company reaffirmed its guidance last fall, which is mixed on Marketbeat. com.
Revenues are expected to come in above consensus, but earnings are expected to come in below. In this light, the company can be surpassed again, but it will have to do so in a much stronger fashion to impress the market.
Analysts are buying the UnitedHealth group
Post-release analyst activity has been light, but there are two things to take from the data. The first is that analysts have the stock pegged at a Moderate Buy, which has held steady for more than a year. The 2 is the target price. The price is more than 22.0% above the post-release price action, which is trending higher.
The last major report on the analyst tracking page Marketbeat.com came in early December from Credit Suisse. They rated the stock at Outperform and raised their target above the current consensus figure.
They came out and reiterated that position after the Q4 results and listed the stock as one of their HOLT ideas for 2023. HOLT shares are Outperform-rated stocks with less demanding market expectations .
The Technical Outlook: UnitedHealth Group could be bottoming out
The price action in UnitedHealth Group is certainly heating up after the Q4 release. The shares popped up and showed signs of a bottom, but the action at the end of the day confirms the resistance is still present. This could lead to additional volatility, if not some actual downside, in the short term, but it looks like the stock could be nearing a turning point.
The long-term trend is upward, and the price action is below the 150-day EMA and at a point where reversals have occurred in the past. Assuming the market repeats itself, this stock should start to bottom this week or soon. If not, this market may have entered a consolidation range that could keep moving sideways until the end of the year.