UnitedHealth Group (UNH): Buy Ahead Of Analyst Day - Leerink
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Leerink Partners analyst Aana Gupta, reiterated her Outperform rating on UnitedHealth Group (NYSE: UNH) ahead of the annual Investor Day on Nov. 29th.
The analyst expects 2017 EPS guidance to come in at a midpoint of at least $9.20, modestly above consensus of $9.14 and representing YoY EPS growth of 15%+. The company is in the sweet spot of execution, with the expectation of margin expansion in the Health Benefits business within Medicare Advantage from firm pricing and solid STAR ratings improvement, as well as modestly expanding margins in Commercial Employer group business, as pricing remains firm and UNH enjoys below peer utilization.
The analyst stated "the exit from Public Exchanges is expected to offer a meaningful tailwind of up to $600MM+ excluding the Premium Deficiency Reserve (PDR) booked in 2015. Membership growth remains strong across Group and Individual Medicare Advantage, Medicaid, and we even expect modest gains in Commercial self and fully insured Employer business". No change to the PT of $185, based on a P/E of ~18x 2018E EPS of $10.31.
Shares of UnitedHealth Group closed at $152.26 yesterday.
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