Wall St Engine
Raymond James Reiterates Market Perform on $UNH, Says Earnings Quality Now a Concern, Cuts Estimates
Analyst comments: "We are reiterating our Market Perform rating on UNH and taking a sharper pencil to our numbers, cutting our 2025 adjusted EPS estimate to $20 (from $22) and our 2026 estimate to $23 (from $25). We have rebased 2024 EPS to $23.97 after adjusting for $4.0 billion ($3.70 EPS) in one-time accounting gains UNH booked in 2024.
These included: 1) $3.3 billion in gains from 'strategic portfolio refinement'—essentially asset sales—with $1.4 billion from Optum Health, $1.1 billion from UHC, and $800 million from Optum Insight; and 2) $710 million in investment income tied to unrealized gains in the venture portfolio. We treated the $3.3 billion as pretax and the $710 million as after-tax.
Needless to say, we think these earnings are low-quality and non-recurring. Our assumptions include: 1) rebasing 2024 EPS to $23.97; 2) assuming Optum Health delivers a 10% margin on ~$45B FFS revenue and 0% on ~$60B risk revenue for $4.5B in 2025 EBIT; 3) a ~2% y/y margin decline at UHC due to increased MA cost trends, implying MA margins down ~400 bps y/y; and 4) Optum Insight performing within guidance and Optum Rx slightly outperforming. That said, we’re unclear how Optum Insight can grow EBIT by ~$920M while overcoming the $800M 2024 gain.
The punch line here is that—beyond known macro headwinds—UNH is now also an earnings quality and visibility story."
Analyst: John Ransom
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Raymond James Reiterates Market Perform on $UNH, Says Earnings Quality Now a Concern, Cuts Estimates
Analyst comments: "We are reiterating our Market Perform rating on UNH and taking a sharper pencil to our numbers, cutting our 2025 adjusted EPS estimate to $20 (from $22) and our 2026 estimate to $23 (from $25). We have rebased 2024 EPS to $23.97 after adjusting for $4.0 billion ($3.70 EPS) in one-time accounting gains UNH booked in 2024.
These included: 1) $3.3 billion in gains from 'strategic portfolio refinement'—essentially asset sales—with $1.4 billion from Optum Health, $1.1 billion from UHC, and $800 million from Optum Insight; and 2) $710 million in investment income tied to unrealized gains in the venture portfolio. We treated the $3.3 billion as pretax and the $710 million as after-tax.
Needless to say, we think these earnings are low-quality and non-recurring. Our assumptions include: 1) rebasing 2024 EPS to $23.97; 2) assuming Optum Health delivers a 10% margin on ~$45B FFS revenue and 0% on ~$60B risk revenue for $4.5B in 2025 EBIT; 3) a ~2% y/y margin decline at UHC due to increased MA cost trends, implying MA margins down ~400 bps y/y; and 4) Optum Insight performing within guidance and Optum Rx slightly outperforming. That said, we’re unclear how Optum Insight can grow EBIT by ~$920M while overcoming the $800M 2024 gain.
The punch line here is that—beyond known macro headwinds—UNH is now also an earnings quality and visibility story."
Analyst: John Ransom
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Wall St Engine
JPMorgan Raises $CAVA PT to $115 from $110, Says Long-Term Growth Story Reaffirmed by 1Q25 Results, Maintains Overweight Rating
Analyst comments: "CAVA shares have traded in a very wide range since its $22 IPO on June 14, 2023, reaching as high as $172 on November 13, 2024. First-quarter 2025 results reaffirm our recent re-upgrade of the stock at $81 on March 20, 2025, with a 'buy now and own for the long term' opinion.
CAVA has significant U.S. white space for expansion beyond its current multi-market success, is generating free cash flow unusually early on a high cash balance, and has several near-term operational and brand initiatives to drive both sales and profits. We see the current 382 units expanding to a range of 2,000–3,500 units through 2037–2043. Our valuation blends these scenarios at 20x terminal EPS and a 7% discount rate to arrive at our new $115 December 2026 price target, up from $110 (Dec 2025)."
Analyst: John Ivankoe
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JPMorgan Raises $CAVA PT to $115 from $110, Says Long-Term Growth Story Reaffirmed by 1Q25 Results, Maintains Overweight Rating
Analyst comments: "CAVA shares have traded in a very wide range since its $22 IPO on June 14, 2023, reaching as high as $172 on November 13, 2024. First-quarter 2025 results reaffirm our recent re-upgrade of the stock at $81 on March 20, 2025, with a 'buy now and own for the long term' opinion.
CAVA has significant U.S. white space for expansion beyond its current multi-market success, is generating free cash flow unusually early on a high cash balance, and has several near-term operational and brand initiatives to drive both sales and profits. We see the current 382 units expanding to a range of 2,000–3,500 units through 2037–2043. Our valuation blends these scenarios at 20x terminal EPS and a 7% discount rate to arrive at our new $115 December 2026 price target, up from $110 (Dec 2025)."
Analyst: John Ivankoe
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$NBIS: everything you need to know, visualized:
• The all-in-one AI package
• Business segments
• Sentiment
• Global expansion
• Total Addressable Market
• Quarterly revenue
• Gross margins
• Balance Sheet
• Valuation
A thread 🧵👇 https://t.co/ENSz20e3vA
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$NBIS: everything you need to know, visualized:
• The all-in-one AI package
• Business segments
• Sentiment
• Global expansion
• Total Addressable Market
• Quarterly revenue
• Gross margins
• Balance Sheet
• Valuation
A thread 🧵👇 https://t.co/ENSz20e3vA
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