10 Best Healthcare Stocks to Buy According to Hedge Funds

3. United Health Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 104

UnitedHealth Group Incorporated (NYSE:UNH), a diversified healthcare company founded in 1974, offers a wide range of health insurance plans, health services, and pharmacy care programs through its various segments.

The company’s Q1 2024 results showed a decent increase in revenue, rising nearly $8 billion year-over-year to $99.8 billion. Meanwhile, earnings per share of $6.91, exceeded the expectations of $6.62. UnitedHealth Group Incorporated (NYSE:UNH) also provided over $6 billion in aid to care providers.

The UnitedHealth Group Incorporated’s (NYSE:UNH) strong cash flow supports potential acquisitions, and its focus on customer growth and AI positions it well for future success. This bullish sentiment is reflected in the “Strong Buy” analyst rating of the stock and a price target suggesting a potential 17.6% upside.

Here’s what Baron Funds said about UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2024 investor letter:

“UnitedHealth Group Incorporated (NYSE:UNH) is a leading health insurance company that operates across four segments: United Healthcare, Optum Health, OptumInsight, and OptumRX. Shares fell alongside other managed care organizations (MCOs) due to patient utilization of Medicare Advantage (MA) that was higher than consensus forecasts, raising concerns that MCOs had mispriced 2024 bids and could suffer margin compression as a result. In addition, the industry is facing headwinds from MA reimbursement cuts and Star Rating changes. While management said higher cost trends are mostly transitory and reflected in its bidding, and 2024 guidance was roughly in line with consensus, investors took a more cautious wait-and-see approach. We believe UnitedHealth should remain a core portfolio holding, as it is a way to play positive demographic, population health, and value-based reimbursement trends. Despite its size, we think the company should be able to grow earnings consistent with its 13% to 16% long-term EPS annual target, the fastest among major MCOs.”