UnitedHealth: Trading at Discount to Peers While Lower Risk

Our New York presenter likes UnitedHealth (UNH: NYSE, $26.47) at this level. This leading managed care player is trading at a discount to peers, but its diverse business model holds less risk in light of some of the upcoming regulatory changes facing the industry. The company has improved its service levels recently and customer retention reflects that trend. The scale of UNH's operations and the reach of its provider network would allow the company to benefit significantly from expansion of coverage under the healthcare reform. Cost pressures are a challenge, but the company has been able to raise prices to offset higher medical costs. The presenter conservatively targets $30, but notes that $35 is possible if more favorable assumptions are proven valid.