Why Leerink Sees Further Upside In Shares of Unitedhealth Group

Ana Gupte of Leerink on Thursday commented that

posted a good fourth quarter report with a five cent earning per share beat on “modest” revenue upside. Gupte notes that Consolidated MLR beat by 60 basis points, though Commercial MLR disappointed. The analyst adds that Amil re-pricing was a key driver that provided a three cent boost to earnings per share. According to Gupte, the company's SG&A ratio disappointed, while DCP was stable year over year though down sequentially. Gupte states that the fourth quarter report supports a view that shares have a “good set-up” for 2015 with top-line upside and flat to even expanding margins in select segments. The analyst believes that the medium-term growth story is “compelling” given a superior flexibility in its balance sheet that provides optionality for a dividend boost and accretive merger and acquisition activity. Shares are Outperform rated with a price target raised to $125 from a previous $115.