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Key Factors
With shares in rebound mode, UnitedHealth Group offered a double increase for the market.
The impacts of the cyber assault had been lower than feared.
The underlying enterprise is stable and money move is substantial. 
5 shares we like higher than UnitedHealth Group
UnitedHealth Group’s NYSE: UNH Q1 outcomes had been higher than anticipated for 2 causes: First, the inventory worth is now rebounding from long-term lows and deep worth territory with ample upside forward. Second, UnitedHealth analysts see it advancing greater than 20% on the present consensus, and consensus could go larger as a result of it is cautious. 
The consensus estimate moderated forward of the Q1 launch due to fears that proved to be excessive. Now analysts must rework their estimates and certain revise worth targets to be larger. As a result of outcomes help the market and the inventory has worth and yield, bullish momentum might simply take this inventory worth to the excessive finish of the analysts’ vary. That will put it again on the development that started in 2020. Get UnitedHealth Group alerts:Signal Up
UnitedHealth Cyber Assault Affect Is Much less Than Feared
UnitedHealth Group’s outcomes are good due to underlying enterprise energy and a less-than-expected influence from the latest cyber assault. The corporate reported $99.79 billion in internet income for a achieve of 8.6% over final yr, outpacing the consensus by 50bps. Whereas 50bps is a slim margin, outcomes might have been far worse given the scope of the assault. Optum grew quickest segmentally at 13% and was offset by slower development within the core UnitedHealth section. UnitedHealth’s development was primarily pushed by a rise within the variety of shoppers served. 
The GAAP margin was deeply impacted by the sale of Brazil operations and the cyberattack. The influence of the Brazilian operations is primarily non-cash associated to FX-translation losses; the cyber assault’s influence is quantified at 74 cents per share, together with 49 cents in direct response efforts and 25 cents in enterprise disruption.
After adjusting for the consequences of Brazil and direct response, however not enterprise disruption, the web working margin is flat in comparison with final yr, and the EPS is above consensus. The $6.91 outpaced the consensus reported by Marketbeat by 29 cents and is compounded by improved steerage. UnitedHealth issued favorable steerage. The corporate expects adjusted earnings from $27.50 to $28 in comparison with the analysts’ consensus of $27.53.
UnitedHealth’s Money Circulate and Capital Returns Are Wholesome
The cyber assault negatively impacted money move in Q1 and can this yr, however the results are restricted, lower than anticipated, and can diminish as quickly as the present quarter closes. Regardless, the corporate’s money move in Q1 was adequate to climate the storm. Steadiness sheet highlights embody a money construct offset by a rise in debt and legal responsibility and a single-digit decline in fairness. The online result’s leverage close to 2x money and 0.7x fairness, each fortress-quality, permitting for dividends and share repurchases. 
The dividend is above the broad market common, yielding about 1.7%. The payout ratio is low at 30% and compounded by share repurchases. The repurchases in Q1 introduced the common adjusted share rely down 1.4% and are anticipated to proceed this yr. A distribution enhance can also be doubtless. UNH has elevated for 14 consecutive years and is on observe to make the following enhance when it declares a cost. 
UnitedHealth Group Confirms a Backside
The worth motion in UnitedHealth Group superior greater than 5% following the discharge to substantiate a backside at $450. The market is in rebound mode and prone to transfer larger. There may be some resistance on the $480 stage and short-term 30-day EMA, however it might not final lengthy. A break above that stage might take the market as much as $500 or $520, the place resistance could also be substantial. 
The long-term outlook is sweet. UnitedHealth ought to resume its long-term uptrend from that time on account of insurance coverage business tendencies, margins and capital returns. The query is that if it is going to development reasonably larger from this stage or surge to the highest of the analysts’ vary and realign with a earlier development. 
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