UnitedHealth Group (UNH) Stock Closed Higher Today on Favorable Medicare Advantage Rates

NEW YORK (TheStreet) -- Shares of UnitedHealth Group (UNH) ended the day higher by 3.36% to $116.40 on heavy volume in Monday's trading session, along with other health insurers after the Centers for Medicare and Medicaid Services issued preliminary 2016 Medicare Advantage rates.

Credit Suisse analysts believe the rates were favorable for health insurers like UnitedHealth Group, since they were "in-line if not slightly better" than investors had expected.

The firm said that under CMS' initial proposal, insurers would see rate changes of between negative 1% to plus 1%, depending on the risk that each insurer faces.

Exclusive Report: Jim Cramer's Best Stocks for 2015

In addition, CMS decided not to restrict at-home health risk assessments, and agreed to reduce the weighting of certain risk factors that had affected certain plans with a higher proportion of low-income beneficiaries.

Credit Suisse says UnitedHealth Group is one of the three insurers with the highest exposure to Medicare Advantage, along with Humana (HUM)  and WellCare  (WCG) .

CMS is expected to announce the final 2016 rates on April 6.

About 5.48 million shares of UnitedHealth Group exchanged hands today, higher compared to its average trading volume of about 4.69 million shares a day.

Hopkins, MN-based UnitedHealth Group is a diversified health and well-being company that engages in enabling technology and clinical care management.

Separately, 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, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. 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 18.7%. 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 49.59% 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. Despite an increase in cash flow, UNITEDHEALTH GROUP INC's cash flow growth rate is still lower than the industry average growth rate of 151.10%.
  • 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

More from Markets

How to Overcome the Fear of Trading Super-Momentum Stocks

How to Overcome the Fear of Trading Super-Momentum Stocks

How Closed-End Funds Use Leverage to Boost Returns

How Closed-End Funds Use Leverage to Boost Returns

Weeding Out Cannabis Stocks; Micron Buying Opportunity -- ICYMI

Weeding Out Cannabis Stocks; Micron Buying Opportunity -- ICYMI

3 Reasons Darden Restaurants Has Been Killing it

3 Reasons Darden Restaurants Has Been Killing it

Oil Pares Gain on Report OPEC Considering Production Hike

Oil Pares Gain on Report OPEC Considering Production Hike