UnitedHealth GroupThe majority of Wall Street is bullish UnitedHealth Group ( UNH) with 19 of the 24 analysts covering the stock at either strong buy (9) or buy (10), and the median 12-month price target sitting at $58, according to Thomson Reuters data. That implies potential upside of 13% from Tuesday's close at $51.35. The company is the strongest large-cap recommendation of Stifel Nicolaus analyst Tom Carroll, who says the Minnetonka, Minn.-based health care services company is attractive because it's diversifying away from just health insurance. UnitedHealth has beaten Wall Street's earnings expectations in the first three quarters of this past fiscal year, delivering an average upside surprise of nearly 22%. The company is slated to report its fiscal fourth-quarter results on Jan. 19 with the average analysts' estimate calling for a profit of $1.02 a share in the December-ending period on revenue of $25.69 billion. TheStreet Ratings rates UnitedHealth Group at A+ and considers the stock a buy with a $63.68 price target.
CVS CaremarkCVS Caremark ( CVS) also comes highly recommended with 23 of the 26 analysts covering the stock at either strong buy (7) and buy (16) and the 12-month median price target of $45 implying potential upside of 9.8% from Tuesday's close at $41.01. Gabelli analyst Jeff Jonas is bullish on CVS Caremark, which provides pharmacy benefit management services as well as operating more than 7,000 drugstores, because he believes the company has good cash flow and that the Caremark portion of the business has had an "amazing number of contract wins." The company has consistently beaten the market's earnings expectations this year, and the shares have outperformed the broad market, gaining 18% vs. a marginal increase for the S&P 500. The stock now trades at a forward price-to-earnings multiple of 12.7X, and is finishing 2011 strong, hitting its 52-week high of $41.30 on Tuesday. CVS Caremark is scheduled to report its fiscal fourth-quarter results on Feb. 8, and the average estimate of analysts polled by Thomson Reuters is for a profit of 89 cents a share in the latest three months on revenue of $28.05 billion. TheStreet Ratings has an A grade for CVS ratring the stock as a buy with a price target of $48.96.
WellPointWellPoint ( WLP) is also a popular pick for 2012 with 18 of the 24 analysts covering the stock at either strong buy (9) or buy (9), and the median 12-month price target sitting at $87 vs. Tuesday's close at $67.93. Caroll of Stifel Nicolaus also likes WellPoint, which he sees as a pure play on the insurance space. He's expecting the company to generate earnings of close to $8 per share next year. The current average analysts' estimate is at $7.75, giving the stock a relatively cheap forward price-to-earnings multiple of less than 9X at present levels. Though Carroll recommends WellPoint, he noted that investors should be aware the company is more exposed to health care reform than some of its peers. His price target for the shares is $90. The stock has gained 19% in 2011, and the Indianapolis-based health care benefits provider is tentatively expected to report its fiscal fourth-quarter results on Jan. 25 with Wall Street expecting earnings of $1.11 a share in the December quarter on revenue of $15.38 billion. TheStreet Ratings gives WellPoint a B grade with a buy rating and a $64.50 price target. >>To see these stocks in action, visit the 3 Health Care Buys for 2012 portfolio on Stockpickr.
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