We are reiterating out Neutral recommendation on
UnitedHealth Group Inc
). Though bottom line fell short of the year-ago earnings, it was
in line with the Zacks Consensus Estimate.
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UNITEDHEALTH GP (UNH): Free Stock Analysis
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Following the release of UnitedHealth's first-quarter results,
estimates have been revised downward. Net income of $1.16 per
share was in line with the Zacks Consensus Estimate. Earnings,
however, declined 11.4% on a year-over-year basis. UnitedHealth,
for the second consecutive quarter, reported in line with our
The Zacks Consensus Estimate for 2012 moved down by 0.2% to $5.44
as 11 of 14 estimates moved south over the last 30 days. For
2013, 12 of 14 estimates moved down pulling the Zacks Consensus
Estimate by 0.4% to $5.84 over the same time frame.
UnitedHealth expects to generate $122 billion in revenues in
2013, an increase of nearly 10% from 2012 level. Net earnings are
still expected between $5.25 and $5.50 per share.
We are bullish about the company's long-term growth prospects. It
has strengthened its key capabilities to respond to the emerging
growth opportunities. These initiatives have been taken to expand
its Medicaid and Medicare business, grow the health service
business and expand the international operations. Additionally,
it has been successfully growing its membership. With the
implementation of TRICARE Contract, it added 2.9 million military
The company also remains focused to return more value to its
However, certain headwinds such as high unemployment, growing
medical costs, and pressure from Health Care overhaul might weigh
on its positives. Nevertheless, we believe the company will beat
the odds given its diversified business model with leading market
share positions in the Commercial, Medicare, and Medicaid
UnitedHealth carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Apart from UnitedHealth, other stocks in the HMO industy that are
currently performing well include
Health Net Inc.
). All these companies carry a Zacks #2 Rank (Buy).