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. [1] 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%
| Returns | Mar 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| UNH Return | 7% | 2% | 219% |
| S&P 500 Return | 6% | -3% | 107% |
| Trefis MS Portfolio Return | 5% | -6% | 270% |
[1] Month-to-date and year-to-date as of 3/30/2022
[2] 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 [↩]