1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 150
UnitedHealth Group Incorporated (NYSE:UNH) operates as a healthcare company. Truist upped the price objective on the company’s stock to $660 from $610, keeping a “Buy” rating as part of the broader research note previewing Q1 results in Healthcare Services. As per the firm, the sector seems to be relatively well-placed in a fluid environment considering the scaled, largely domestic, attractive FCF generating and defensive nature of the group. UnitedHealth Group Incorporated (NYSE:UNH)’s diversified portfolio, which spans health insurance, pharmacy benefits management, and healthcare services, places it well for continued growth. Furthermore, the synergies between the segments enable cross-selling opportunities and integrated care delivery models.
Elsewhere, AM Best, a leading ratings agency, highlighted that UnitedHealth Group Incorporated (NYSE:UNH)’s operating earnings benefit from a large scale, offering cost advantages for medical expenditures and administrative expenses. As per the firm, the company’s strategic focus is on value-based care and reimbursement models to align provider and payor, which supports managing medical cost trends and improving outcomes for members. UnitedHealth Group Incorporated (NYSE:UNH)’s large membership base results in significant economies of scale. Also, the integration of UnitedHealth Group Incorporated (NYSE:UNH) with its affiliate, Optum, provides the former with a competitive advantage by providing access to advanced capabilities for cost management, pharmacy and innovative technology, care delivery, and strong data analytics.
Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Shares of UnitedHealth Group Incorporated (NYSE:UNH), the largest health care company by revenue, were volatile in the quarter. Quarterly medical cost trends ran higher than expected, the high end of quarterly guidance was cut, and the preliminary 2025 outlook missed consensus. The Republican November election sweep drove shares up, as Republicans have historically been more supportive of managed care, which bodes especially well for Medicare Advantage, the industry’s main growth engine. In December, UnitedHealth’s CEO was shot and killed, and the subsequent outpouring of public anger over the managed care industry’s history of claims denials sparked concern about the industry’s ability to control health care spend. The specter of pharmacy benefit manager (PBM) legislation was an additional pressure along with multiple press pieces questioning managed care practices and profit drivers. Longer term, we believe managed care will remain embedded in the U.S. health care system and UnitedHealth, as the largest, best managed, and most disciplined and forward-thinking company in the industry, will continue to grow.”
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