UnitedHealth Seems Curiously Undervalued Given Multiple Growth Drivers

In a business where scale is king UnitedHealth (NYSE:UNH) has all the scale that an investor could ask for and more. What’s more, the company has actively built and pursued attractive growth opportunities outside of its traditional (and more heavily regulated) medical insurance/benefits business, including its OptumHealth provider business, OptumRx PBM, and OptumInsight analytics/information systems businesses.

I like where UnitedHealth sits going into 2023. Normalization of healthcare utilization will be a modest headwind, but the company’s vulnerability to inflation and a potential recession are quite modest, and higher rates benefit the business. On top of that, the company still has opportunities to drive growth from its OptumHealth and Medicare Advantage businesses. While there are some challenges on a straight P/E-based valuation, I do think these shares are undervalued on a longer-term core earnings basis.

 

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UnitedHealth Seems Curiously Undervalued Given Multiple Growth Drivers