Goldman Remains Selective on Managed Care Names (UNH) (HUM)

April 2, 2013 10:26 AM EDT
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Price: $158.66 -0.03%

Rating Summary:
    25 Buy, 2 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Yesterday the CMS announced final Medicare advantage rates, which showed a 3 percent increase, 500 bps higher than the preliminary rate announced on Feb. 15th. In response a number of related stocks are on the move today.

Commenting on the news, Goldman Sachs analyst Matthew Borsch said, "We remain selective in the context of our Neutral coverage view. With this MA rate update, we reiterate our CL-Buy on UnitedHealth Group Incorporated (NYSE: UNH), the industry leader trading at an attractive valuation of under 10X our 2014 EPS of $6.00, as well as our Buy ratings on Health Net (NYSE: HNT) and WellCare Health Plans (NYSE: WCG). For UNH, MA represents about 20% of earnings and is likely to be a ‘drag’ over the next couple of years (rather than a real problem, had the Feb. 15 rate stood). On the other hand, we are still Sell-rated on Humana (NYSE: HUM) and Universal American Corp (NYSE: UAM) that have the majority of their earnings tied to MA with about half of those members in non-HMO plans."

For an analyst ratings summary and ratings history on UnitedHealth Group click here. For more ratings news on UnitedHealth Group click here.

Shares of UnitedHealth Group closed at $58.97 yesterday.

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