Skip to Content
Stock Analyst Update

UnitedHealth Maintains Earnings Guidance for 2021

We do not plan on changing our moat rating or fair value estimate for the company.


Narrow-moat UnitedHealth (UNH) released its operating results for 2020 that beat our expectations slightly in terms of adjusted EPS and significantly in terms of cash flow due to timing issues. However, the firm maintained its guidance for 2021 that was given at its December investor day. While there appears to be further upside in those 2021 earnings goals if COVID-related constraints are more modest that currently anticipated, we expect to keep our near-term expectations and recently raised $329 fair value estimate roughly intact for now.

In 2020, the company beat our expectations and its own recently raised guidance for the year, turning in $257 billion in revenue for the year (in line with expectations) and adjusted earnings per share of $16.88 (higher than its previous guidance of $16.50-$16.75). That mild outperformance on the bottom line does not change UnitedHealth's fair value. We would note, though, that the firm's cash flows were stronger in 2020 than we anticipated, with free cash flow coming in at $20 billion for the year (versus our $17 billion expectation). Management highlighted that early customer receipts led to that outperformance. At its analyst day, the company guided to $20 billion-$21 billion of operating cash flow in 2021 (which could lead to free cash flow of around $19 billion), but it did not back that guidance during this call, suggesting that the better-than-expected cash flows in 2020 may reverse in 2021, as timing issues normalize. Therefore, we may trim our expected 2021 free cash flow assumption moderately.

For 2021, the company maintained its adjusted EPS guidance but continued to highlight potential constraints of $1.80 based on the COVID-related health and economic effects.  So while our estimate for adjusted EPS will likely remain within the company's target range for 2021 ($17.75-$18.25), we recognize that there may be upside potential if those effects are not as severe as currently expected.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Julie Utterback does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.