Stock (Symbol) |
United Health (UNH) |
Stock Price |
$149 |
Sector |
| Healthcare |
Data is as of |
| November 21, 2016 |
Expected to Report |
| Jan 16 – 20 |
Company Description |
 UnitedHealth Group Incorporated is a health and well-being company. The Company’s business platforms include UnitedHealthcare and Optum. UnitedHealthcare provides health care benefits to various customers and markets. Optum is a health services business serving the health care marketplace, including payers, care providers, employers, Governments, life sciences companies and consumers. The Company’s business platforms have four segments: UnitedHealthcare, OptumHealth, OptumInsight and OptumRx. OptumHealth is a health and wellness business serving the physical, emotional and financial needs of individuals. OptumInsight provides technology, operational and consulting services to participants in the health care industry. OptumRx is a pharmacy benefit manager. Purchased Catamaran 3/30/15. Source: Thomson Financial |
Sharek’s Take |
 UnitedHealth (UNH) has been a solid stock the past year, benefiting from leaving Obamacare and strong performance from Optum, its health benefits services company. I was about to write about UNH’s strong performance — it was next on my desk — and then the company issued a press release and upped estimates. So basically within one qtr 2017 profit estimates have risen from $9.06 to $9.14 and now $9.30 to $9.60. I lean to the $9.60 because why would you put a range if you didn’t think you could hit the top of that range. With 2016 estimates at $8.01, a profit of $9.60 would be 20% profit growth. And a P/E of 20 would mean a $192 stock. The asking price for UNH after hours is $157 so that equates to 18% upside from here. But you also get three great characteristics with this stock. First, Optum is taking deals from its competition (Caremark) when in the past it typically won deals which were either ties to UnitedHealth healthcare insurance coverage or government ones. Second, leaving Obamacare helps as it was is costing the nation’s largest health insurer around 4% of profits, or $0.35 a share in 2016 profits. Third, this is a very safe stock with clean annual reports. UNH is part of the Dow and has a 2% yield. It also has a plump 15% Est LTG. All-in-all this stock is an excellent selection for most any stock investor. |
One Year Chart |
 Last qtr UNH clocked in with sales growth of 18% and profit growth of 23%, which beat the 18% estimate. The best thing about this stock chart is UNH has been rising, which is unlike many healthcare stocks right now. The 2nd best thing is it sells for (sold for) a P/E of 16. Now that’s on the $9.14 2017 estimate, which just got bumped to $9.30 – $9.60. Also, these charts were done last week when UNH was $149. Profit Estimates for the next 4 qtrs were 48%, 14%, 14% and 13%. Now they will be increased. |
Fair Value |
 My Fair Value as of last week was 19x earnings, which gave us a Fair Value of $1.74. I’ll keep that for now, and perhaps adjust the Fair Value to 20x higher earnings estimates next qtr. That’s a good thing. Looking out to 2018 the Fair Value here is $194. So basically I think the stock is headed towards $200. |
Bottom Line |
 UnitedHealth has everything going for it right now. Business is good and the stock has been rising as profits have been coming in above estimates. So now what will the stock do with even better estimates? We’ll see. UnitedHealth is also a safe stock with clean financials and a solid yield of almost 2%. UNH ranks 4th in the Conservative Growth Portfolio, Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
4 of 34Aggressive Growth Portfolio 4 of 18Conservative Stock Portfolio 4 of 29 |
