UnitedHealth Group: Reaches Near All-Time High But Still Looks Like A 'Buy' (Rating Upgrade)

Core Viewpoint - UnitedHealth Group (UNH) is viewed as a solid buy-and-hold investment, with recent earnings growth outpacing stock price increases, making it attractive for long-term investors despite facing challenges in 2024 [1][10]. Financial Performance - UNH has a market capitalization of nearly $550 billion and has recently reached an all-time high in share price [1]. - The company reported adjusted EPS impacts from a cyberattack on its Change Healthcare subsidiary, estimated to reduce EPS by$0.60 to $0.70, representing about 2.35$21.85 and $24.90 [4][5]. - Analysts expect continued double-digit earnings growth over the next two years, even accounting for the cyberattack's impact [5]. Dividend Growth - UNH has increased its dividend for 15 consecutive years, with a recent increase from$1.88 to $2.10 per quarter, reflecting an 11.7$6.72, leading to a 125% FCF dividend payout [8]. - The company expects FCF per share to rebound next year, potentially reaching $27 to$30 or more [8]. Insider Activity - There has been significant insider selling, with over $560 million in stock sold in the last five years compared to only$1.5 million in purchases, raising concerns about management confidence [2][3]. - Despite this, insider selling can occur for various reasons, and it does not necessarily indicate negative sentiment [3]. Market Position - UNH is considered a defensive stock, likely to perform better in a volatile market, although it has faced downward pressure from broader market trends [6]. - The forward P/E multiple is approximately 21.5x, aligning with the current market multiple, suggesting that UNH is trading around its fair value [5][6]. Conclusion - Despite facing challenges in the first half of 2024, including a cyberattack and antitrust review, UNH's growth trajectory remains intact, making it a viable option for dividend growth investors [10].