UnitedHealth: Margins Are Under Pressure From All Sides (Archive)
UnitedHealth faces broad-based, intensifying margin pressures across insurance, provider, and pharmacy businesses.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- I am bearish on UnitedHealth due to broad-based gross margin pressures, especially from higher-than-expected insurance utilizations and Medicare Advantage funding shortfalls.
- Lower-than-usual relative valuations vs peers may be justified given the sharply falling earnings expectations and almost unanimous consensus EPS downgrades.
- UNH vs SPX 500 is in a strong bearish trend and there are no signs of buyers in the ratio charts.
- While good opex management has led to EBIT margins holding up so far, I suspect margin pressures in Optum Health and Optum Rx (pharmacy) segments may lead to cracks here.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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