BofA, Raymond James Bullish On UnitedHealth's Growth Prospects After Q4 Beat

UnitedHealth Group Inc (NYSE: UNH) reported a healthy quarter with above-consensus earnings and revenue and reiteratated its 2019 guidance.

The Analysts

Bank of America Merrill Lynch analyst Kevin Fischbeck reiterated a Buy rating on UnitedHealth with a $320 price target.

Raymond James analyst John Ransom reiterated a Strong Buy rating with a $310 price target.

BofA Bullish On Insurer's Growth Prospects

UnitedHealth reported balanced earnings upside across UnitedHealthcare and Optum, BofA's Fischbeck said in a Wednesday note.

While noting the medical loss ratio was more than expected, the analyst said he sees the Medicaid issues as company-specific and fixable over time.

"Management did not feel the need to spike out the health insurance fee impact for their view on 2019, signaling that UNH has, in their own view, become the diversified health care company they set out to become." 

Optum continued to deliver strong revenue and improving margins, Fishbeck said. 

"We remain bullish on UNH's growth prospects as the company continues to gain share in key areas." 

The firm maintained its 2019 and 2020 estimates and issued a 2021 EPS estimate of $18.75.

Raymond James Remains Constructive 

Despite continued improvement in the Medicaid business, margins were below the 3-5-percent target, Ransom said in a Tuesday note. 

The company is confident of hitting the low end of the range in 2019, the analyst said. 

Muted sell-side expectations for Q1 and the general conservative nature of management are likely to derisk near-term earnings, Ransom said. 

The analyst said his 2019 estimates are largely unchanged.

"Net-net, we remain constructive on shares of UNH as they continue to expand their offerings while capturing more market share." 

The Price Action

UnitedHealth shares were advancing 1.54 percent at $260.86 at the time of publication Wednesday. 

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