8. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 150
UnitedHealth Group Incorporated (NYSE:UNH) operates as a health care company in the United States and internationally. TD Cowen analyst Ryan Langston maintained a “Buy” rating on the company’s stock, setting the price target of $609.00. The rating stems from factors, including the company’s ability to surpass market anticipations and the confidence in financial outlook. As per the analyst, UnitedHealth Group Incorporated (NYSE:UNH)’s strategic initiatives and pricing strategies can fuel growth. The company has affirmed its 2025 performance outlook, including revenues in the range of $450 billion – $455 billion and net earnings of between $28.15 – $28.65 per share.
The analyst also highlighted that UnitedHealth Group Incorporated (NYSE:UNH) managed to improve its operating cost ratio, mainly because of the strategic portfolio initiatives, which remains a positive indicator for future profitability. The FY 2024 operating cost ratio came in at 13.2% as compared to 14.7% in 2023. Overall, the reaffirmed price target demonstrates confidence in the projected earnings growth and strategic positioning. UnitedHealth Group Incorporated (NYSE:UNH)’s diversified portfolio, which includes health insurance, pharmacy benefits management, and healthcare services, places it well for long-term growth. Notably, the synergies between the segments enable cross-selling and integrated care delivery models.
Bretton Capital Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“We invest in UnitedHealth Group Incorporated (NYSE:UNH) because we believe this revealed preference is real. The regulatory landscape changes constantly, there is plenty of noise in the system, and it is possible to imagine a world where health insurers would not be necessary. However, the massive healthcare system we’re in today structurally relies on private companies to play the crucial role of managing care and negotiating prices, and we don’t think the US government is prepared to take all that over. It was a bad year for our investment, as the stock returned a negative 2.4%, but it trades for a meaningful discount to the market despite consistently delivering double digit earnings growth for years, including 10% last year.
First, the elephant in the room. On December 4, Brian Thompson, who ran UnitedHealth’s insurance business, was assassinated in New York City. Shell casings had the words “deny” and “depose” written on them, a bullet was inscribed with “delay.” Five days later, Luigi Mangione was arrested in Pennsylvania with what appears to be the murder weapon and a manifesto criticizing the American healthcare system. Mangione has since become a cult celebrity.
Healthcare is not a normal market. Governments have decided that healthcare is worth intervening in to achieve noneconomic outcomes, most notably providing care for people who can’t afford it. Each country’s regulatory system designs its system and rations healthcare in its own way: the UK employs providers directly and attempts a central triage function to allocate care; continental European systems typically have private providers but some version of all-payer rate setting; and the US has a decentralized model where providers can charge whatever they want, but payers can choose not to pay it, plus government-run systems like Medicare and Medicaid that cover about 35% of Americans. Every system implements some type of brake on costs, usually a combination of the government and private companies, and the US system leans more on the private sector for this than others. Our system is not without its benefits. It is vastly more lucrative for providers like surgeons and medical device companies. It also allows for some measure of money signal; if you are a rich weekend warrior with an orthopedic issue, the American system will offer a dizzying array of cutting-edge specialists where the UK would suggest getting used to the feeling of aging and stiffening one’s upper lip. However, our system violates the social expectation of the word “insurance…” (Click here to read the full text)
