How Should You Play UnitedHealth Stock Going Into Q1 Earnings?

UnitedHealth Group Incorporated UNH is set to report first-quarter 2025 results on April 17, 2025, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $7.27 per shareon revenues of $111.01 billion. See the Zacks Earnings Calendar to stay ahead of market-making news.First-quarter earnings estimates have remained stable over the past week. The bottom-line projection indicates an increase of 5.2% from the year-ago reported number. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 11.2%. Image Source: Zacks Investment ResearchFor the current year, the Zacks Consensus Estimate for UnitedHealth’s revenues is pegged at $451.24 billion, implying a rise of 12.7% year over year. Also, the consensus mark for current-year earnings per share is pegged at $29.73, implying a jump of around 7.5% on a year-over-year basis.UnitedHealthhas a robust history of surpassing earnings estimates, beating the consensus estimate in each of the last four quarters, with the average surprise being 2.5%. This is depicted in the figure below.UnitedHealth Group Incorporated Price and EPS Surprise UnitedHealth Group Incorporated price-eps-surprise | UnitedHealth Group Incorporated QuoteQ1 Earnings Whispers for UNHHowever, our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat, but that’s not the case here.UNH has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.You can see the complete list of today’s Zacks #1 Rank stocks here.What’s Shaping UNH’s Q1 Results?UnitedHealth's first-quarter earnings are expected to have benefited from higher premiums, driven by the expansion of its domestic commercial membership base. The Zacks Consensus Estimate for premium revenues for the first quarter indicates 11.5% year-over-year growth, whereas our model estimate suggests a nearly 9% increase. Higher contributions from both Optum Health and UnitedHealthcare divisions are expected to have supported premium growth.UNH's first-quarter top-line performance is expected to have been enhanced by a rise in service revenues from the Optum brand. Both the consensus estimate and our model estimate imply a nearly 10% jump in service revenues. Similarly, the Zacks Consensus Estimate for product revenues indicates an almost 12% increase.Value-based care expansion in Optum Health, new client wins at Optum Rx,and enhanced technology-enabled offerings are major tailwinds for the company’s results. The Zacks Consensus Estimate for operating income from the Optum business segment suggests a 28.6% year-over-year increase. Meanwhile, the Zacks Consensus Estimate for operating income from UnitedHealthcare indicates 7.6% year-over-year growth. These are expected to have positioned the company for year-over-year growth in the first quarter.Now, let’s focus on memberships in selected programs. The Zacks Consensus Estimate for UnitedHealthcare’s total domestic commercial customers suggests 3.5% year-over-year growth, whereas our estimate implies a nearly 2% gain. The consensus mark for Medicare Advantage members indicates a 5.8% year-over-year rise.However, the consensus estimate for Medicaid memberships implies a 0.8% decline from the year-ago level. Also, international memberships are expected to have declined in the quarter under review due to divestments. These are likely to have pulled total memberships down from the year-ago period. The consensus estimate implies a 0.6% fall year over year.Rising medical costs, as seniors continue resuming elective procedures,are expected to have elevated UnitedHealth’s overall expenses in the quarter. The expected growth in healthcare utilization, especially in the Medicare Advantage space, might have affected margins, making an earnings beat uncertain this time around. Our model estimate for total operating costs indicates an 8.6% increase from the prior-year period.The Zacks Consensus Estimate for UNH’s medical care ratio is pegged at 85.92%, up from 84.3% in the year-ago quarter. Our estimates for medical costs and costs of products soldindicate 10% and 9.1% year-over-year increases, respectively.UNH’s Price Performance & ValuationUnitedHealth's stock has jumped 18.5% in the year-to-date period compared with the industry’s growth of 18%. Its peers, such as Humana Inc. HUM and Molina Healthcare, Inc. MOH, have gained 16.3% and 18.6%, respectively, during this time. All these stocks have outperformed the S&P 500 significantly, which has plunged 9.1% during the same period.YTD Price Performance – UNH, HUM, MOH, Industry & S&P500 Image Source: Zacks Investment ResearchNow, let’s look at the value UnitedHealth offers investors at current levels.The company’s valuation looks a bit stretched compared with the industry average. Currently, UNH is trading at 19.47X forward 12 months earnings, slightly above its five-year median of 19.20X and above the industry’s average of 16.71X. In comparison, Humana and Molina Healthcare are currently trading at 19.17X and 13.60X, respectively. Image Source: Zacks Investment ResearchHow Should You Play UNH Stock Now?UnitedHealth’s strategic investments in technology and value-based care — particularly through its Optum segment — continue to position the company as a frontrunner in healthcare innovation. This emphasis not only drives operational efficiency but also improves patient outcomes, a key advantage as the industry increasingly shifts toward quality-based models.With projected annual earnings growth of 12.4% over the next five years, UnitedHealth remains a compelling long-term investment. The company’s strong cash flow underpins consistent shareholder returns through dividends and share repurchases, reinforcing its financial stability and disciplined capital allocation.Adding to the bullish case, the Centers for Medicare & Medicaid Services recently approved a 5.06% increase in Medicare Advantage (MA) payments for fiscal 2026, a sharp revision from the initially proposed 2.23%. This development is expected to meaningfully boost profitability for top-tier MA providers like UnitedHealth and Humana.We anticipate that UnitedHealth will extend its profit growth trajectory in the upcoming earnings report, likely supporting continued stock price momentum. The company’s push toward managing costs effectively — through disciplined contract negotiations and optimized patient discharge processes — should further enhance margins. Given its strong fundamentals, long-term growth outlook, and favorable policy backdrop, UnitedHealth’s premium valuation appears justified. Investors may consider adding to their positions now.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report Humana Inc. (HUM): Free Stock Analysis Report Molina Healthcare, Inc (MOH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks