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Mizuho Securities Raises Price Target on UnitedHealth Group (UNH) Following 2Q15 Results

July 17, 2015 8:16 AM EDT
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Price: $494.70 +0.32%

Rating Summary:
    28 Buy, 5 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Mizuho Securities maintained a Buy rating on UnitedHealth Group (NYSE: UNH), and raised the price target to $150.00 (from $146.00), following 2Q15 results. Analyst Sheryl Skolnick saw no real evidence of any problematic pricing, and says that upside was further "proof" that the "Optumization" of UNH continues.

Skolnick commented, "Clearly, analysts were concerned that UNH's 2Q15 was a 'miss' not mix and that it could be the first sign of a cyclical crack. We take that issue on in the analysis in this report by exploring it in several ways: the impact of ACA premium/ MLR regulation & taxes, a stable cost trend, the Optum impact and UNH's own commentary. We see no evidence of pricing under trend and therefore raise our 2015 - 2018 estimates and our PT to $150 from $146 on stronger FCF now & in the future. Buy UNH."

Skolnick also added, "New guidance includes CTRX, which should close this month, and reduced share repurchase activities YOY: EPS of $6.25 to $6.35 means that the top of the original range of $6.00 to $6.25 is now the bottom of the new range. Our new FCF estimate is $7.1B vs $7B or $7.37 per share vs. our prior $7.29. Including the expected $0.30 per share of incremental earnings power from CTRX, we now arrive at a $150 DCF (2.5% LT growth rate)."

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 $124.93 yesterday.



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