Jefferies Initiates Hold Rating on UnitedHealth Group (UNH)

Jefferies & Company is out with a research report this morning, where it initiates a Hold rating on UnitedHealth Group UNH; it has a $40.00 price target on the stock. The analysts noted that the company's acquisition history has resulted in an organization that is a maze of legal entities, noting that there is no way to calculate exposure. The called UNH a “black box.” The analysts also noted that Ingenix Is A Key Differentiator for UNH, insomuch as Ingenix provides a very deep warehouse of mineable data for important cost trends and medical management interventions. The analysts said, “Our $40 PT represents 11.0x our 2011 EPS estimate, and a 7% premium to the 10.3x expectation for the industry. UNH currently trades at the top of its peer group, a premium justified by leading positions in several businesses and diverse earnings streams. UNH's relative valuation shows investors' enthusiasm for those factors. Mgt expects down 2011 EPS. We think UNH's significant acquisition history presents some additional MLR risk in Commercial.”