Why UnitedHealth Group Should Have a Healthy 2014

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of UnitedHealth Group (NYSE: UNH  ) gained 1% this morning after Deutsche Bank upgraded the health insurer from "hold" to "buy."

So what: Along with the upgrade, analyst Scott Fidel raised his price target to $85 (from $74), representing about 14% worth of upside to yesterday's close. While value investors might be turned off by the stock's solid run in 2013, Fidel believes there's more room to run given UnitedHealth's improving margin profile relative to its peers.

Now what: According to Deutsche, UnitedHealth's risk/reward trade-off remains attractive.

"Our 2014 employer health benefits survey shows UNH pushing through price increases above the market which is a reversal from below-average rate increases in 2013," noted Deutsche. "We are more now confident in the margin outlook for Health Benefits and upgrade our rating to Buy and raise PT."

When you couple that positive operational outlook with UnitedHealth's still-reasonable forward P/E of 13, it's tough to disagree with Deutsche's upgrade. 

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