Analyst Comments on UnitedHealth Group’s (NYSE:UNH) Strong ’17 OutlookBy Carrie Williams
Oppenheimer analyst Michael Wiederhorn reiterated a Buy rating and raised his price target to $171 (from $161) on UnitedHealth Group (NYSE: UNH), in a report today. This new price target is an upside of 8.5% from the current levels.
Ever since the stellar Q3 earnings release on October 18, the shares of the company has been on a solid bullish move, creating new 52-week highs as well as lifetime highs for the stock. The company’s latest guidance posted on Monday proved to be yet another positive for the stock, prompting the shares to move from $152.11 to $158.12, a jump of nearly 4%, within a single day. The shares had finally closed at $157.59 yesterday.
For FY2017, UnitedHealth Group issued Adj. EPS guidance of $9.30-9.60 due to positive drivers like solid revenue from Optum business, HIF reprieve for a year, reduced Individual/Exchange headwind, and robust growth anticipated in Medicare Advantage. This EPS guidance is higher than the street estimates of $9.15. Consequently, Wiederhorn increased the EPS estimate of Oppenheimer from $9.20 to $9.43 and increased PT to $171. The analyst also commented that GOP bias toward managed care from new president-elect could also turn out to be another positive for the stock price in near future.
“Overall, the outlook is quite impressive, especially considering the management team’s traditionally conservative posture. We believe the business is performing well, and could benefit from the changes in Washington given the GOP bias toward managed care. As a result, we would continue to be buyers of this blue-chip name.”
Other positives like new M&A transactions, with the latest being CVS Health, Catamaran contract awards, and rapidly increasing dividend payouts is also expected to make UNH enjoy a Santa Claus rally.
According to analysts’ recommendations from the past three months of UNH, the overall consensus rating on the stock is a Strong Buy. The analysts have an average price target of $17.30, based on data compiled by TipRanks.com. The PT is an upside of 9.49% from the current levels.