United Health: Strong Earnings, but Guidance Raises Eyebrows

[Stocks-to-Watch]

Health insurer UnitedHealth Group (UNH) posted strong earnings for the fourth quarter, but shares fell 3.7% on Thursday afternoon. UNH posted $1.17 of EPS, 14 cents ahead of consensus expectations.

One reason for the stock’s weakness might be that the company simply reaffirmed its 2012 guidance, instead of boosting it. Barclays analyst Joshua Raskin, who has a Positive rating on the shares, noted that the midpoint of 2012 EPS guidance is below analysts’ expectations.

“While the fourth quarter results were clearly ahead of expectations, it looks like it is simply too early in the year for UnitedHealth to alter its recently provided guidance. UnitedHealth still expects earnings per share in 2012 to be in the range of $4.55-$4.75. The midpoint of guidance of $4.65 per share, is consistent with our current estimate of $4.65 per share, but below the street consensus estimate of $4.77 per share.”

Raskin, however, sees lots of upside in the stock, and notes that the company looks likely to benefit from low medical costs as fewer people use health services.



Original Article Source by Barrons.com