ELV

UnitedHealth Group Forecasts First Annual Revenue Decline in Decades

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Image Source: TradingView By Brian Nelson, CFA On January 27, UnitedHealth Group (UNH) reported mixed results for its fourth quarter of 2025 with non-GAAP earnings per share coming in-line with expectations, but revenue missing the mark. Consolidated revenues for 2025 were $447.6 billion, representing 12% year-over-year growth. For 2025, earnings from operations were $19 billion, and the company posted a net margin of 2.7%, while cash flow from operations was $19.7 billion, or 1.5x net income. For 2025, UnitedHealthcare expanded revenues 16%, while Optum expanded revenues 7% on the year. Full year adjusted net earnings were $16.35 per share. Management had the following to say about the results: We confronted challenges directly and finished 2025 as a much stronger company, … Read more

UnitedHealth Group’s Restored 2025 Outlook Falls Below Consensus Estimates

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Image Source: TradingView By Brian Nelson, CFA UnitedHealth Group (UNH) reported disappointing second quarter results and issued an outlook for 2025 that came in below expectations. The firm’s second-quarter 2025 revenue grew $12.8 billion year-over-year to $111.6 billion thanks to growth at both UnitedHealthcare and Optum. Second-quarter earnings from operations, however, came in at $5.2 billion, down from $7.9 billion in the same period a year ago. Net earnings were $4.08 per share, below the consensus estimate of $4.45 per share. UnitedHealth Group’s second quarter consolidated medical care ratio of 89.4% was up 430 basis points year-over-year. Management had the following to say about the results: UnitedHealth Group has embarked on a rigorous path back to being a high-performing company … Read more

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

UnitedHealth Group’s 2025 Outlook Remains Robust

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Image: UnitedHealth Group’s shares have been choppy the past couple years. By Brian Nelson, CFA UnitedHealth Group (UNH) reported mixed fourth quarter results on January 16 with revenue coming in a bit light of consensus and non-GAAP earnings per share beating what the Street was looking for. UnitedHealth Group’s 2024 revenues grew 8% year-over-year to $400.3 billion, while full year 2024 earnings from operations came in at $32.3 billion. Adjusted earnings from operations of $34.4 billion exclude cyberattack direct response costs and South American impacts. The company’s full year medical care ratio was 85.5% compared to 83.2% in 2023. The higher medical care ratio was due to revenue effects of CMS’s Medicare funding restrictions, member mix, and the timing of … Read more

Pfizer 6% Dividend Yield Speaks of Considerable Risk, Free Cash Flow Coming Up Short

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Image: Pfizer’s shares have been under considerable pressure the past few years. By Brian Nelson, CFA  Pfizer’s (PFE) revenue has faced pressure of late from expected declines in COVID-related sales from Comirnaty and Paxlovid, as the pharma giant navigates a post-COVID-19 world. However, excluding weakness from COVID-19 related revenue, the company’s underlying revenue grew 7% during 2023. Pfizer is working to build a strong oncology portfolio as it strives to realize billions in annualized cost savings to get to the other side of its troubles.   Image: Pfizer’s 2024 financial guidance. For the full-year 2024, Pfizer is targeting revenue in the range of $58.5-$61.5 billion (was $58.5 billion in 2023) and adjusted diluted earnings per share in the range of … Read more

We Remain Bullish; Is This 1995 – The Beginning of a Huge Stock Market Run?

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Image: Large cap growth stocks have trounced the performance of the S&P 500, REITs, and bonds since the beginning of 2023. We expect continued outperformance in this area of the market. By Brian Nelson, CFA We’re now roughly four years past the depths of the COVID-19 meltdown, where equities collapsed in February and March of 2020. As the markets began to recover through 2020, our long-term conviction in equities only grew stronger. We think the biggest risk for long-term investors remains staying out of the market on the basis of what could be considered stretched valuation multiples. As we outlined heavily in the book Value Trap, valuation multiples hardly tell the complete story about a company and often omit key … Read more

Eli Lilly’s Shares Have More Than Doubled During the Past 52 Weeks

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Image: Eli Lilly’s shares have been on a tear these past few years. By Brian Nelson, CFA On February 6, Eli Lilly (LLY) reported excellent fourth-quarter results that showed revenue and non-GAAP earnings per share coming in better than expectations. The company’s fourth-quarter results were bolstered by sales of diabetes and weight-loss drug Mounjaro, which saw sales in the quarter leap to ~$2.2 billion from ~$279 million in the year ago period. We continue to be in awe of the sales momentum behind GLP-1 receptor agonists, and the opportunity continues to be robust, despite already rapid sales acceleration. Though Eli Lilly trades at a premium to the high end of our fair value estimate range, we may be low in … Read more

Earnings Roundup: V, INTC, HUM, PYPL

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By Brian Nelson, CFA Visa (V) Operating and Free Cash Flow Margins Remain Robust, Consumer Spending Remains Resilient Image: Visa’s operating margins are phenomenal. Image Source: Visa On January 25, top-weighted Best Ideas Newsletter portfolio holding Visa reported excellent first-quarter fiscal 2024 results that beat on the top and bottom lines. Net revenues advanced 9% on a year-over-year basis, while the firm was able to drive non-GAAP net income 8% higher and non-GAAP earnings per share 11% higher. In the quarter, payments volume advanced 8%, cross-border volume advanced 16%, and processed transactions increased 9%, all on a year-over-year basis. The company’s operating margin came in at an impressive 69% in the quarter, and it hauled in ~$3.35 billion in free … Read more

UnitedHealth Group Still a Free-Cash-Flow Generating Machine

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Image: UnitedHealth Group continues to drive strong revenue and operating earnings performance. Image Source: UnitedHealth Group. By Brian Nelson, CFA On January 12, healthcare benefits provider UnitedHealth Group (UNH) reported strong fourth-quarter 2023 results that showed revenue advancing 14% on a year-over-year basis thanks to strength at its UnitedHealthcare and Optum divisions, while earnings from operations advanced 11.6%. UnitedHealth is facing some temporary cost pressures in its business due to pent-up demand for discretionary procedures following the worst of the COVID-19 pandemic, but its net margin held up fine in the period, coming in at 5.8%, the same level a year ago. Management reaffirmed its previously-issued 2024 guidance, and we continue to like UnitedHealth Group as a key weighting in … Read more

12 Reasons to Stay Aggressive in 2024

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By Brian Nelson, CFA 1. The Fed has signaled that rate cuts could start with inflation at a 2 handle (2 point something) and not at exactly 2.0%. That means that the Fed may become anticipatory to prevent overshooting to the downside with inflation. We see this as positive for long-duration equities, particularly those whose free cash flow generation is robust in the out-years, inclusive of big cap tech and the stylistic area of large cap growth. 2. Unemployment is at structural lows of 3.7%. Employers are working hard to keep talent on board, and with each paycheck, employees are pumping more and more money into the stock market via retirement accounts. This tailwind remains a stiff one and will … Read more