John O'Connell, CFAUnitedHealth Group IncUNHPAST TOP PICKJan 13, 2025

He's bought and sold this over 15 years. Now, earnings are closer to a trough than a peak, and analysts guided up after their last report.

They've gotten their medical loss ratios under control and there's potential earnings improvement.

Costs are still running high. He still owns as part of a diversified healthcare allocation, but he's neutral on whether it's the best place for new $$. Over time, will probably give you 10-11% per year (decent compounding, but not a top pick idea).

It's fallen from recent highs for no reason. It's cheap here and the turnaround is well under way.

They had a great quarter and will continue to move higher.

It reports next week. The former CEO has returned, who will kep costs under control. He sees upside.

(Note the short timeframe.)  Still likes it at these prices. Regaining earnings power after several setbacks, can still approach $500 as it regains confidence of investors.

Hits April 2025 highs. Fundamentals have been improving since last quarter. Healthcare is defensive, attractive now. Is happy to hold on. Has been great for him.

 A defensive name. Trump gave it a break by lifting Medicare premiums. Up 23.45% this year.

It relies on US federal and state funding through Medicare for a lot of its revenue. Too risky. The glory days of growing through this kind of funding are done.

A battleground stock. Has done pretty well since the revision in the Medicaid rate from 0 to 3%, a major change. Run by a great CEO. Is not overvalued now.

He wants to see confirmation that the current chart base is real. Wants to see a breakout first which could see tons of upside. 

(Note the shortish timeframe.)  Bumpy road. Biggest weight on stock has been Trump administration's proposal to essentially flatten (increase of 0.1%) Medicare Advantage rates in 2027. That miniscule increase combined with medical cost inflation really puts pressure on. 

Trying to prioritize margins over growth. Insurance products will be repriced next year, should see better growth in topline and bottom line.

The whole sector is hurt by high medical costs, an aging US population who have higher medical costs, and reimbursements (pressure from Washington). UNH has a good track record, but these problems will persist.

He owns CVS instead, and a third of their business is health insurance, which 100% of UNH's business. The problem with US healthcare is all the news coming out of Washington. A lot of their business is dictated by the whims of one or two people in the U.S. Still a good business, but is a little speculative.