UnitedHealth Pays the Price

Deutsche Bank analyst Scott Fidel worries about UnitedHealth's dependence on AARP in particular.

"While United remains in strong financial condition and represents an ideal business partner for AARP from a business perspective given its leading position in Medicare, we would not entirely ignore the possibility of AARP looking to move away from this partnership should the political fallout from the options crisis intensify for United following the departure of Dr. McGuire," Fidel wrote on Sunday. "While we were already expecting political rhetoric would intensify coming into November, particularly given the recent decelerating momentum of the Republicans in Washington, the revelation of options backdating at the largest Medicare health insurer -- and corresponding sacking of the managed-care industry's most prominent CEO -- does not come at the most opportune time."

Nevertheless, Fidel continues to recommend UnitedHealth's stock because of the company's strong fundamental performance. His firm owns at least 1% of the shares itself. It has an investment banking relationship with the company as well.

Skolnick continues to maintain her fair market rating on UnitedHealth, however. Even with the big internal probe now over, Skolnick still feels uncertain about the company's future.

"The big question is whether UnitedHealth deserves a premium multiple without the vision of McGuire," she explains. "And the answer to that is no -- not until the company earns it."

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