Why UnitedHealth Group (UNH) Stock Is Falling Today

NEW YORK (TheStreet) -- UnitedHealth Group (UNH) was falling 3.5% to $75.43 Thursday after missing analysts' expectations for revenue in the first quarter.

For the first quarter UnitedHealth posted earnings of $1.10 a share, beating analysts' estimates of $1.09 a share by 1 cent. Revenue grew 4.5% from the year-ago quarter to $31.7 billion. Analysts surveyed by Thomson Reuters expected revenue of $32.03 billion for the quarter.

The insurance company said that it saw intense price competition in several markets, including New York, in the quarter. UnitedHealth said competitors are pricing coverage below cost to attract customers, which could hurt its enrollment numbers.

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TheStreet Ratings team rates UNITEDHEALTH GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate UNITEDHEALTH GROUP INC (UNH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.16% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UNH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • UNITEDHEALTH GROUP INC has improved earnings per share by 17.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITEDHEALTH GROUP INC increased its bottom line by earning $5.50 versus $5.28 in the prior year. This year, the market expects an improvement in earnings ($5.60 versus $5.50).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Providers & Services industry average, but is less than that of the S&P 500. The net income increased by 14.7% when compared to the same quarter one year prior, going from $1,244.00 million to $1,427.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.4%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • You can view the full analysis from the report here: UNH Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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