UnitedHealth Stock is 21% of my portfolio. Here’s What I Plan to do Next

About this video

• Video Title: UnitedHealth Stock is 21% of my portfolio. Here’s What I Plan to do Next
• Channel: Dividend Compounders with Cheese
• Speakers: Amos
• Duration: 18:44

Overview

This video discusses the current financial performance of UnitedHealth Group, analyzes its recent earnings report, and provides updated price forecasts. The speaker, Amos, shares his personal investment strategy for his significant UnitedHealth holdings, weighing the company's strong revenue growth against a concerning drop in operating income and net margin. He also explains the impact of share buybacks on earnings per share and offers long-term price predictions.

Key takeaways

• Earnings Performance: UnitedHealth Group exceeded revenue and earnings per share (EPS) expectations, with revenue growing 12.2% year-over-year.
• Decreased Operating Income: Despite revenue growth, operating income saw a significant 50% year-over-year decrease due to increased operating expenses from higher medical claims. This resulted in a net margin drop from 6% to 2.1%.
• Share Buyback Impact: UnitedHealth is actively buying back shares, which artificially boosts EPS by reducing the number of outstanding shares, masking the operational decline in profitability.
• Price Forecasts: Based on updated EPS guidance and historical PE ratios, the speaker forecasts UnitedHealth stock to reach around $360-$365 by the end of 2025, potentially $400 by the end of 2026, and $600-$610 by 2028.
• Speaker's Strategy: Amos plans to hold his existing UnitedHealth shares, which constitute 21.6% of his portfolio, rather than selling or buying more, believing the stock is currently fairly valued despite operational concerns.