UnitedHealth Analyst Bullish After Q4 Print

UnitedHealth Group Inc UNH reported solid results Wednesday for the fourth quarter of 2019, beating earnings expectations.

The 2020 guidance was not raised, as the company tends to be conservative early in the year, and “investors should not read anything else into this,” according to Cantor Fitzgerald.

The UnitedHealth Analyst

Steven Halper maintained an Overweight rating on UnitedHealth with a $315 price target.

The UnitedHealth Thesis

UnitedHealth reported quarterly revenue of $61 billion, in-line with expectations, and earnings of $3.90 per share versus the consensus estimate of $3.78, Halper said in a Wednesday note. (See his track record here.)

The company’s Optum business recorded 8% revenue growth, with OptumHealth’s revenue growing more than 30%; OptumInsight growing revenue by 14%; and OptumRx remaining flat due to a large client transition, the analyst said. 

Despite this client transition, OptumRx continues to record above-market growth rates, suggesting “strong market share gains and cross sales realizations,” Halper said. The company’s free cash flow generation was impressive, he said. 

UnitedHealth continues to be “the most diversified insurer in our coverage list, is nicely diversified outside of insurance with its Optum segment and should generate significant free cash flow in 2020,” the analyst said.

Cantor Fitzgerald expects Optum to continue to generate solid growth.

UnitedHealth Price Action

UnitedHealth shares were trading 3.01% higher at $296.71 at the time of publication Wednesday.