UnitedHealth Group (NYSE: UNH), the American health care company that serves more than 85 million people worldwide, released new guidance for its next earnings report. On December 2nd, UnitedHealth announced that they expect a 6% year-over-year increase in revenue. Looking forward, the insurance company anticipates earnings per share for 2015 to be between $6 and $6.25; an 11% year-over-year increase. Reports also noted that the market cap for UnitedHealth has increased to $96.75 billion, just behind MasterCard (NYSE: MA) at $101.8 billion.
There were many concerns surrounding the future of the health care industry during the rollout of the Affordable Care Act. Although it will take many more years to extract concrete data, insurance agencies such as UnitedHealth have seen their share prices rise in the first two years of the ACA. Shares of UNH closed at $99.46 on December 3rd, a huge increase from $53.34; the cost of UNH shares in June 2012 when the Supreme Court upheld the constitutionality of the bill.
A Financial Expert’s Opinion
On December 3rd, analyst Michael Wiederhorn from Oppenheimer reiterated an Outperform rating on UnitedHealth with a price target of $108.
Wiederhorn explained the UNH’s new guidance “UNH offered a bullish tone for the future.” He continued, “Management appears confident that it can return to its 13-16% long-term EPS growth rate in 2016 and beyond.” Weigerhorn concluded, “Based on the updated guidance, we are raising our FY2015 EPS estimate to $6.21 from $6.13. Due to the higher estimates and bullish tone, we are raising our price target to $108 from $94.”
Wiederhorn has rated UnitedHealth four times, earning him a 75% success rate for the stock with an average return of +19% per UNH recommendation.
Michael Wiederhorn’s Past Recommendations
Wiederhorn has a history rating stocks in the healthcare sector, such as Centene Corporation (NYSE: CNC) and Cigna Corporation (NYSE: CI). Past recommendations have helped Wiederhorn earn an 88% overall success rate recommending stock with an average return of +20.9% per recommendation.
The analyst rated Centene a Buy 8 times in the past year. He rated CNC a Buy in December of 2013 when the stock was $40.72 a share. The stock has risen consistently since then he has maintained a Buy rating. Now, shares of Centene are $101.68. These ratings have earned Wiederhorn a 31% average return per Centene recommendation.
Similarly, Wiederhorn has rated Cigna 6 times in the past year and a half. He recommended to Buy Cigna in August 2013 when shares were $42.03. He has maintained a Buy rating since then, and now Cigna shares are $104.03. These ratings have earned Wiederhorn a 25.1% average return per Cigna recommendation.
UnitedHealth seems optimistic about its future earnings, but some are still waiting to see if the Affordable Care Act will influence the healthcare sector. Wiederhorn has a lot of experience rating stocks in the healthcare sector, but do you think now the time to Buy UNH?