NEW YORK (TheStreet) -- Shares of UnitedHealth Group (UNH) - Get UnitedHealth Group Incorporated Report were upgraded to "neutral" from "underperform" today at Sterne Agee, which raised their price target to $126 from $105. The stock is up 0.49% to $115.35 in pre-market trading today.
"After reading the Berskshire Hathaway (BRK.A) - Get BRK.A Report annual report last weekend, we were reminded that even value-oriented investors should understand that finding great businesses at a fair price is more important than average businesses at bargain prices," analysts said.
That clearly is the case with UnitedHealth Group, Sterne Agee said, adding that while "pricey" relative to their inherent value bias, they have been "too blinded" by price in their search for value.
Separately, Deutsche Bank raised its price target for the Hopkins, MN-based diversified health and well-being company today to $127 from $119 after hosting meetings with management. Deutsche says management remains upbeat about earnings growth acceleration in 2016. It notes UnitedHealth remains a top pick with a "buy" rating.
TheStreet Ratings team rates UNITEDHEALTH GROUP INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITEDHEALTH GROUP INC (UNH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- UNH's revenue growth trails the industry average of 18.4%. Since the same quarter one year prior, revenues slightly increased by 7.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 49.43% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UNH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- UNITEDHEALTH GROUP INC has improved earnings per share by 9.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITEDHEALTH GROUP INC increased its bottom line by earning $5.70 versus $5.50 in the prior year. This year, the market expects an improvement in earnings ($6.20 versus $5.70).
- Net operating cash flow has significantly increased by 127.43% to $2,429.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 105.25%.
- The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that UNH's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.
- You can view the full analysis from the report here: UNH Ratings Report