Morgan Stanley Lifts UnitedHealth’s Target Price to $515, Says More Upside Later in The Year

Morgan Stanley raised their stock price forecast on UnitedHealth to $515 from $462 and said conservative guidance around utilization and acuity trends should pave the way for more upside later in the year.

This upgrade in target price comes just after the United States’ largest publicly-held health care provider reported better-than-expected earnings in the first quarter on Thursday, April 15. UnitedHealth Group said its Q1 revenue jumped 9% to $70.2 billion, beating analysts’ consensus estimates of $68.9 billion.

Minnesota-based health insurer reported adjusted net income of $5.31 per share, beating Wall Street’s expectations of $4.38 per share, which represents year-over-year growth of over 42% from $3.72 per share seen in the same quarter a year ago.

“2021 shaping up to be a year of beat and raise. Prior period development (~$1.04) accounted for the majority of 22% beat and we expect more upside as the year progresses and United gains better visibility on what percent of deferred care is not coming back. Moreover, commentary on the call highlighted that while utilization is still below baseline (for Medicare and Medicaid populations), early evidence suggests acuity levels for members who are coming back to the medical setting are not different than pre-COVID-19,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

“Considering that 2021 guidance assumes ~70% of COVID headwinds ($1.26 out of $1.80) would occur in 2H21 as utilization and acuity levels ramp, we think guidance leaves ample room for upside. 2022 on track to >$22 in earnings power. Our back-of-the-envelope earnings bridge highlights the path for 2022 EPS to exceed consensus estimates. Net-net, we see a path for United to deliver a bear to bull earnings range of $20.98 to $22.84 ($21.91 midpoint) in 2022 versus consensus’ $21.07. See Exhibit 1 for our earnings bridge to 2022.”

Following the upbeat earnings results, UnitedHealth’s shares, which surged more than 19% in 2020, hit a new all-time high of $392.93 on Friday.

Fifteen analysts who offered stock ratings for UnitedHealth in the last three months forecast the average price in 12 months at $425.13 with a high forecast of $515.00 and a low forecast of $370.00.

The average price target represents a 9.59% increase from the last price of $387.93. Of those 15 equity analysts, 13 rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the bull-case scenario target price of $592 and the worst-case scenario forecast of $323.

UnitedHealth Group is the number one Medicare Advantage player with ~28% market share, the number two Medicare PDP player with ~20% market share, and the number two commercial player with ~15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” Morgan Stanley’s Goldwasser added.

“With a large lead in breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

Other equity analysts also recently updated their stock outlook on Thursday. Oppenheimer raised the target price to $440 from $375. Stephens upped the price target to $425 from $415. Citigroup lifted the raises price objective to $450 from $408.

Moreover, RBC increased the stock price forecast to $409 from $396. Jefferies raised the target price to $414 from $394. Cowen and Company upped the price target to $415 from $370. Raymond James lifted the target price to $435 from $405.

Check out FX Empire’s earnings calendar

UnitedHealth at All-Time High After Strong Quarter

Dow component UnitedHealth Group Inc. (UNH) is trading at an all-time high on Thursday after beating Q1 2021 top and bottom line estimates. America’s largest publicly-held health care provider benefited from its enormous Medicare/Medicaid administration footprint, posting a profit of $5.31 per-share, $0.94 better than expectations. Revenue rose a healthy 9.0% year-over-year to $70.2 billion, beating consensus by more than $1 billion. The stock currently pays a 1.33% annual dividend.

COVID Still Impacting Profits

The company also raised fiscal year 2021 earnings-per-share (EPS) guidance from $17.75 – 18.25 to $18.10 – 18.60. Those estimates include an approximately $1.80 per-share charge for the “potential net unfavorable impact to accommodate continuing COVID-19 effects, such as: testing and treatment costs; the residual impact of people having deferred care in 2020; and unemployment and other economy-driven factors”. UnitedHealth now serves 49.5 million customers, or more than 15% of the U.S. population.

The earnings report included a cautionary statement about the pandemic-driven profit deferral, noting that “COVID-19 treatment and testing during the quarter was higher than expected, paired with higher elective care deferral patterns. UnitedHealth Group is focused on encouraging and helping people to obtain the care they need, including vaccinations, and expects a continued rise in provision of care as the year progresses.”

Wall Street and Technical Outlook

Wall Street consensus hasn’t budged so far in 2021, maintaining an ‘Overweight’ rating based upon 28 ‘Buy’, 1 ‘Overweight’, and 6 Hold recommendations. Price targets currently range from a low of $360 to a Street-high $462 while the stock is set to open Thursday’s session more than $25 below the median $409 target.  This humble placement could support a rapid advance above 400 in coming sessions.

UnitedHealth failed a breakout above 2018 resistance in the 280s during 2020’s pandemic decline and bounced strongly, hitting new highs in June. Channeled price action stalled near 370 in November, giving way to a modest correction that found support at the 200-day moving average in February 2021. The stock bounced to range resistance in March and broke out once again, targeting an advance that that could reach 450 in the second half of the year.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

UnitedHealth Could Hit New All-Time High on Strong Q1 Earnings; Target Price $393

Minnesota-based health insurer UnitedHealth is expected to report its first-quarter earnings of $4.38 per share, which represents year-over-year growth of about 18% from $3.72 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 13%. The largest insurance company by Net Premiums would post revenue growth of over 7% of around $68.9 billion.

UnitedHealth’s better-than-expected results, which will be announced on Thursday, April 15, would help the stock hit new all-time highs.

UnitedHealth shares, which surged more than 19% in 2020, rose over 7% so far this year.

UnitedHealth Stock Price Forecast

Nine analysts who offered stock ratings for UnitedHealth in the last three months forecast the average price in 12 months of $393.78 with a high forecast of $415.00 and a low forecast of $370.00.

The average price target represents a 4.65% increase from the last price of $376.28. Of those nine analysts, eight rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $462 with a high of $529 under a bull scenario and $261 under the worst-case scenario. The firm gave an “Overweight” rating on the health care company’s stock.

Several other analysts have also updated their stock outlook. Mizuho raised the stock price forecast to $394 from $380. UBS lifted the price target to $362 from $355. Deutsche Bank upped the target price to $409 from $404. Bernstein lowered the target price to $409 from $413. Citigroup increased the price objective to $408 from $390. Stephens lifted the target price to $390 from $380.

Analyst Comments

UnitedHealth Group is the number one Medicare Advantage player with ~28% market share, the number two Medicare PDP player with ~20% market share, and the number two commercial player with ~15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

Check out FX Empire’s earnings calendar

UnitedHealth Earnings Beat Wall Street Estimates; Target Price $395

As expected, fourth quarter net earnings of $2.30 per share and adjusted earnings of $2.52 per share declined as care patterns normalized, while COVID-19 costs rose, and further rebate effects were recognized. That was higher than the market expectations $2.41 per share.

The Company affirmed its recently issued full year earnings outlook for 2021, including net earnings of $16.90 to $17.40 per share and adjusted net earnings of $17.75 to $18.25 per share. The largest insurance company by Net Premiums’ said its full-year 2020 revenues of $257.1 billion grew $15.0 billion or 6.2% year-over-year, reflecting broad-based revenue growth across the businesses.

“Adj. EPS $2.52 vs. $2.41 consensus. 4Q MLR 190 bp better than consensus but the full year MLR was only 10 bp better than UNH’s full year guide of 79.2%. Optum results were better-than-expected across the board. Management noted continued restoration of care patterns in 4Q20– positive for the group as it indicates better visibility into 2021, all else equal, although we look for more detail on the call,” said Charles Rhyee, equity analyst at Cowen and company.

UnitedHealth shares closed 0.25% higher at $352.19 on Tuesday; the stock rose about 20% in 2020.

UnitedHealth Stock Price Forecast

Eighteen analysts who offered stock ratings for UnitedHealth in the last three months forecast the average price in 12 months at $395.61 with a high forecast of $462.00 and a low forecast of $359.00.

The average price target represents a 12.33% increase from the last price of $352.19. From those 18 analysts, 16 rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $462 with a high of $529 under a bull scenario and $261 under the worst-case scenario. The firm currently has an “Overweight” rating on the health care company’s stock.

Several other analysts have also recently commented on the stock. Cowen and company raised the target price to $370 from $360. Bernstein upped the stock price forecast to $413 from $403. Jefferies increased the price objective to $375 from $335. UnitedHealth Group had its target price hoisted by Deutsche Bank to $404 from $359. The brokerage currently has a buy rating on the healthcare conglomerate’s stock.

In addition, Raymond James increased their target price to $405 from $355 and gave the stock a strong-buy rating. Truist increased their target price to $420 from $400. Credit Suisse Group increased their target price to $395 from $355 and gave the stock an average rating.

Analyst Comments

“UnitedHealth Group is the number one Medicare Advantage player with 28% market share, the number two Medicare PDP player with 20% market share, and the number two commercial player with 15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” said Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

Earnings to Watch Next Week: Logitech, Goldman Sachs, NetFlix and IBM in Focus

Next week’s earnings are of much significance for major market movements as 2021 is believed to be a year of recovery on hopes of successful roll-out of the COVID-19 vaccine.

Earnings Calendar For The Week Of January 18

Monday (January 18)

IN THE SPOTLIGHT: LOGITECH INTERNATIONAL

Logitech International S.A., a Swiss-American manufacturer of computer peripherals and software, is expected to report a profit of $1.08 in the fiscal third quarter, which represents year-over-year growth of about 29% from the same quarter last year when the company reported 84 cents per share.

The Lausanne-based company’s revenue to grow over 35% year-over-year to $1.23 billion from $902.69 million in the same period last year.

“We are bullish into Logitech‘s F3Q21 earnings report next week as our December quarter checks point to a better than the expected market environment, most notably for PC peripherals. We’d be buyers into the print and raise our PT to $113 (from $106) to account for recent peer multiple expansion,” noted Erik Woodring, equity analyst at Morgan Stanley.

Tuesday (January 19)

IN THE SPOTLIGHT: GOLDMAN SACHS, NETFLIX

GOLDMAN SACHS: New York-based leading global investment bank is expected to report a profit of $7.33 in the fourth quarter, which represents year-over-year growth of about 56% from the same quarter last year when the company reported $4.69 per share. The bank’s revenue is expected to dip 4.9% from the year-ago quarter to $9.47 billion.

“As market volatility and the urgency around capital raising activity (both equity and debt) subside in 2021, we expect total revenues decline 11% y/y from a strong 2020. We are valuing the group on normalized 2023 EPS. While we still see 15%+ upside to Goldman Sachs (GS) based on this methodology, we see even more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure,” said Betsy Graseck, equity analyst at Morgan Stanley.

“This drives our Underweight rating. Over time, we expect GS can drive some multiple expansion as management executes on its multi-year strategic shift towards higher recurring revenues.”

NETFLIX: California-based global internet entertainment service company is expected to report a profit of $1.35 in the fourth quarter, which represents year-over-year growth of about 4% from the same quarter last year when the company reported $1.30 per share. The streaming video pioneer’s revenue is expected to surge over 20% from the year-ago quarter to $6.60 billion.

“We expect paid net adds to come in the above guide, helped by ongoing shutdowns & seasonal strength. Our view is supported by our positive proprietary 4Q20 survey data, which implies rising pricing power into year-end. We tweaked estimate’s & introduced ’21 quarters; in turn, our DCF-based price target rises to $650 from $625 prior; reiterate ‘Outperform’ rating,” said John Blackledge, equity analyst at Cowen and company.

NetFlix (NFLX) shares were +67% in ’20 alongside a pandemic surge, following massive sub beats in 1Q / 2Q respectively and 28.1MM total paid net adds in 1Q-3Q ’20, up 47% y/y. With consumers staying home amid colder weather & limited social activities, we expect Netflix engagement to remain high; meanwhile, to the extent, there is any NT pressure on UCAN paid subs from the 4Q US price increase, we would consider this a buying opportunity for NFLX shares as the co. grows the value prop alongside rising ARPU.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 19

Ticker Company EPS Forecast
PACW Pacwest Bancorp $0.67
CMA Comerica $1.18
ONB Old National Bancorp $0.38
SCHW Charles Schwab $0.65
GS Goldman Sachs $7.33
STT State Street $1.57
HAL Halliburton $0.15
FULT Fulton Financial $0.27
JBHT J B Hunt Transport Services $1.30
ZION Zions Bancorporation $1.01
PNFP Pinnacle Financial Partners $1.36
FNB FNB $0.24
UCBI United Community Banks $0.60
NFLX Netflix $1.35
IBKR Interactive Brokers $0.58
RNST Renasant $0.59
SBNY Signature Bank $2.91

Wednesday (January 20)

IN THE SPOTLIGHT: UNITEDHEALTH

UNITEDHEALTH: Minnesota-based health insurance and health care data analysis giant is expected to report a profit of $2.41 in the fourth quarter, which represents a year-over-year decline of about 40% from the same quarter last year when the company reported $3.90 per share.

The largest insurance company by Net Premiums is witnessing a slowdown in its international business as increased joblessness due to the COVID-19 pandemic has dented demand for commercial membership.

UnitedHealth Group is the number one Medicare Advantage player with 28% market share, the number two Medicare PDP player with 20% market share, and the number two commercial player with 15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” wrote Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in the breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

United Airlines is expected to report a deep loss in the fourth quarter due to the COIVD-19 pandemic, which harmed demand for travel.

Ohio-based Tide detergent and Pampers diaper manufacturer Procter & Gamble is expected to report an increase in profits on rising demand for home care and laundry products amid the COIVD-19 pandemic.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 20

Ticker Company EPS Forecast
UNH UnitedHealth $2.41
PG Procter & Gamble $1.51
ASML Asml $2.96
MS Morgan Stanley $1.30
USB US Bancorp $0.95
BK Bank Of New York Mellon $0.88
FAST Fastenal $0.33
CFG Citizens Financial $0.91
CBSH Commerce Bancshares $0.92
BOKF BOK Financial $1.92
FCEL Fuelcell Energy -$0.07
KMI Kinder Morgan $0.24
DFS Discover Financial Services $2.36
UAL United Airlines Holdings -$6.56
AA Alcoa $0.09
WTFC Wintrust Financial $1.41
UMPQ Umpqua $0.48
HWC Hancock Whitney Corp $0.90
PLXS Plexus $1.10
STL Sterling Bancorp $0.46
PTC PTC $0.65

Thursday (January 21)

IN THE SPOTLIGHT: IBM

IBM: Armonk, New York-based technology and consulting company is expected to report a profit of $1.81 in the fourth quarter, which represents a year-over-year decline of over 60% from the same quarter last year when the company reported $4.71 per share.

“For 2020, IBM refrained from providing any guidance, citing business uncertainty. Nevertheless, management stated that the fourth quarter is a seasonally strong quarter. The company is witnessing robust pipelines across hybrid cloud and data platform, AI solutions, in Cognitive Apps business driven by strength in Cloud Paks and Security, cloud-based transformation services in GBS segment, and App modernization offerings,” noted analysts at ZACKS Research.

“Also, management is banking on advancement in Red Hat “actual backlog growth.” Moreover, gains from the rapid uptake of IBM z15 is anticipated to be a tailwind. The company also anticipates to end 2020 with reduced debt levels.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 21

Ticker Company EPS Forecast
UNP Union Pacific $2.24
TFC Truist Financial Corp $0.85
TAL TAL International $0.04
TRV Travelers Companies $3.16
BKR Baker Hughes Co $0.17
FITB Fifth Third Bancorp $0.68
NTRS Northern $1.49
MTB M&T Bank $3.02
KEY KEY $0.43
CTXS Citrix Systems $1.34
HOMB Home Bancshares $0.39
INDB Independent Bank $1.02
FBC Flagstar Bancorp $2.36
WBS Webster Financial $0.75
BKU BankUnited $0.71
WNS Wns Holdings $0.59
INTC Intel $1.10
IBM IBM $1.81
ISRG Intuitive Surgical $3.09
CSX CSX $1.01
PPG PPG Industries $1.58
SIVB SVB Financial $3.79
TCBI Texas Capital Bancshares $1.13
ASB Associated Banc $0.30
PBCT People’s United Financial $0.32
OZK Bank Ozk $0.78
WAL Western Alliance Bancorporation $1.33
BKRKY Bank Rakyat $0.17
MTCH Match Group $0.50
MTG MGIC Investment $0.37
STX Seagate Technology $1.13

Friday (January 22)

Ticker Company EPS Forecast
EDU New Oriental Education Tech $0.26
ABBV AbbVie $2.86
HON Honeywell International $2.00
SLB Schlumberger $0.17
KSU Kansas City Southern $1.93
RF Regions Financial $0.42
HBAN Huntington Bancshares $0.29
ALLY Ally Financial $1.05
FHN First Horizon National $0.28
HRC Hill-Rom $1.05
NEP Nextera Energy Partners $0.39
IBN Icici $0.14
TOP Topdanmark A/S kr3.63

 

UnitedHealth Forecasts 2021 Revenue Between $277-$280 Billion; Target Price $400 in Best-Case

For this year, UnitedHealth Group expects revenues of about $257 billion, with net earnings to approach $15.90 per share and adjusted net earnings to approach $16.75 per share.

“Management previously braced investors that 2021 EPS growth would be below its long-term target of 13-16% due to COVID-19 uncertainty. The $18 starting point represents 8% growth, which is 2% below the Street. However, ex $1.80 of potential COVID-19 impact, growth would be an impressive 18%,” said David Windley, equity analyst at Jefferies.

“Other takes: 1) Positive enrollment updates: MA +13.5%, Commercial+1%; 2) Optum margins expand 45bps while Commercial declines 85bps due to COVID;3) Repurchases of $5BN vs $4.5BN in ’20,” Windley added.

At the time of writing, UnitedHealth’s shares traded 4.47% higher at $351.99 on Tuesday; the stock is up about 20% so far this year.

UnitedHealth Stock Price Forecast

Sixteen equity analysts forecast the average price in 12 months at $367.47 with a high forecast of $409.00 and a low forecast of $330.00. The average price target represents a 4.48% increase from the last price of $351.71. From those 16 analysts, 13 rated “Buy”, three rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $371 with a high of $449 under a bull-case scenario and $183 under the worst-case scenario. The firm currently has an “Overweight” rating on the insurance company’s stock.

“We calculate our price target by applying a 20.5x P/E multiple to our base case FY21E EPS of $18.14. Multiple reflects 0.8 turn premium to S&P 500 multiple of 19.6x. Premium in-line with UNH 5 year average premium UNH has historically traded at the adjusted repeal of HIF (+0.4x) and for periods in 2019 where fears over M4A weighed on multiple (we don’t believe this outcome is likely),” said Ricky Goldwasser, equity analyst at Morgan Stanley.

Several other analysts have also upgraded their stock outlook. UnitedHealth Group had its price target increased by equities research analysts at Piper Sandler to $409 from $385. The firm presently has an “overweight” rating on the healthcare conglomerate’s stock. SVB Leerink lifted their price target to $373 from $370 and gave the company an “outperform” rating. Credit Suisse Group boosted their target price to $395 from $355 and gave the stock an “average” rating.

Analyst Comments

“UnitedHealth Group is the number one Medicare Advantage player with 28% market share, the number two Medicare PDP player with 20% market share, and the number two commercial player with 15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” said Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in the breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the U.S. healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A,” Goldwasser added.

Upside and Downside Risks

Risks to Upside: 1) MA growth above the market. 2) Optum integration leads to industry-leading MLR performance. 3) Medicaid margins improve to target 3%-5% range – highlighted by Morgan Stanley.

Risks to Downside: 1) Regulatory uncertainty. 2) Slower growth in core growth areas such as Medicare Advantage, commercial, and Medicaid with focus on services. 3) Optum growth slows as competitors become more reluctant to work with UnitedHealth.

UnitedHealth Q2 Profits Double Amid COVID-19 Slowdown; Buy With Target Price $384

UnitedHealth Group Inc, an American for-profit managed health care company based in Minnesota, reported that its second-quarter profits doubled to $6.64 billion from $3.29 billion a year earlier as COVID-19 pandemic halted less urgent surgeries.

The world’s largest healthcare company by revenue anticipates these results will be offset in the quarters ahead by the assistance measures already taken, the resumption of deferred care and future COVID-19 cost and economic impacts.

The Company maintained its full-year earnings per share outlook for 2020 of net earnings of $15.45 to $15.75 share and adjusted net earnings of $16.25 to $16.55 a share. The second-quarter medical care ratio was impacted by the temporary deferral of care due to the pandemic, declining to 70.2% from 83.1% last year. The company reported earnings per share of $7.12.

At the time of writing, UnitedHealth shares gained 0.5% to 310 before Wednesday’s open.

Executive comment

“Our 325,000 dedicated team members, including the 120,000 clinicians serving on the front lines of care, have tirelessly responded to COVID-19 with agility, innovation and compassion,” David S. Wichmann, chief executive officer of UnitedHealth Group said in a press release.

“We moved swiftly to assist the people we serve and their care providers, including the provision of $3.5 billion in proactive voluntary customer assistance and accelerated care provider funding. We remain committed to taking further actions to address any future imbalances as a result of the pandemic.”

UnitedHealth stock forecast

Fourteen analysts forecast the average price in 12 months at $337.07 with a high forecast of $384.00 and a low forecast of $293.00. The average price target represents a 9.25% increase from the last price of $308.52. From those 14, 13 analysts rated ‘Buy’, one rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $371 with a high of $449 under a bull scenario and $183 under the worst-case scenario. Jefferies raised the target price to $295 from $283 and SVB Leerink initiates with outperform, $360 target price.

We second Morgan Stanley and SVB Leerink on UnitedHealth stock outlook. We also think it is good to buy at the current level as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst view

“UnitedHealth Group is the number one Medicare Advantage player with 28% market share, the number two Medicare PDP player with ~20% market share, and the number two commercial player with 15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” said Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A,” she added.