Does UnitedHealth Stock Have More Upside?
The stock price of UnitedHealth Group (NYSE: UNH) has seen a rise of 7% over the last month, while it’s up 2% YTD. Yesterday, the company announced the acquisition of LHC Group – a home-health company – for $5.4 billion in cash. UnitedHealth already offers managed care, along with health care services through its Optum businesses, and the addition of home health compliments its health offerings.  Our dashboard on UnitedHealth Group Revenues offers more details on the company’s segments. We estimate UnitedHealth Group’s Valuation to be $532 per share, which is only 4% above the current market price of $510. This represents a forward P/EBITDA of 15.4x based on UnitedHealth Group’s EBITDA. Overall, we find UNH stock to be fully valued at its current levels of $510.
But what about the near term? Given that UNH stock has seen a rise of 7% in a month, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a higher chance of a rise in UNH stock over the next month. Out of 395 instances in the last ten years that UNH stock saw a twenty-one-day rise of 7% or more, 249 of them resulted in UNH stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 249 out of 395, or about a 63% chance of a rise in UNH stock over the coming month, implying that UNH stock is a good bet even at its current levels, going by its historical pattern. See our analysis on UnitedHealth Stock Chance of A Rise for more details.
Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years’ data
- After moving 1.1% or lower over a five-day period, the stock rose on 56% of the occasions in the next five days.
- After moving 2.6% or more over ten days, the stock rose on 50% of the occasions in the next ten days.
- After moving 7.3% or more over a twenty-one-day period, the stock rose on 63% of the occasions in the next twenty-one days.
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This pattern suggests that UNH stock has a marginally higher chance of a rise in the next five days. It has an equal chance of a rise or a fall in ten days, but it has a higher chance of a rise over the next month.
UnitedHealth (UNH) Stock Return (Recent) Comparison With Peers
- Five-Day Return: MOH highest at 1.6%; CVS lowest at -2.4%
- Ten-Day Return: MOH highest at 4.8%; CVS lowest at -2.1%
- Twenty-One Day Return: MOH highest at 11.9%; CVS lowest at 1.0%
|S&P 500 Return||6%||-3%||107%|
|Trefis MS Portfolio Return||5%||-6%||270%|
 Month-to-date and year-to-date as of 3/30/2022
 Cumulative total returns since the end of 2016
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- UnitedHealth to Buy Home-Health Firm LHC Group for $5.4 Billion, Anna Wilde Mathews, The Wall Street Journal, Mar 29, 2022 [↩]