What happened
Big insurer UnitedHealth (UNH 0.30%) was the very picture of health, at least as far as its stock was concerned on Tuesday. Its price rose by a sprightly 3.3% that day, well eclipsing the 0.7% rise of the S&P 500 index. This followed an analyst's recommendation upgrade. While we should never solely base our investment decisions on analyst moves, they do often impact the prices of stocks when they occur.
So what
Well before market open on Tuesday, Bernstein prognosticator Lance Wilkes pushed his UnitedHealth recommendation up one peg to outperform (read: buy) from his preceding market perform (hold). The insurance company's price target also got an upgrade, with Wilkes moving it to $603 per share from $595.
Wilkes' previous lukewarm take was based, he wrote, on his expectation of rising utilization of health insurance policies this year, in addition to movement on Medicare Advantage rates. According to him, though, today most of those factors are already priced into the stock.
Meanwhile, UnitedHealth stock is now more attractive based on its low valuations, the "potential for hardening pricing," as the analyst put it, next year. He also cited encouraging potential long-term growth in value-based care among the factors behind the recommendation change.
Now what
It isn't hard to be bullish on UnitedHealth these days, as at the end of last week the company published second-quarter earnings that topped analyst estimates. Not only that, but it slightly raised the lower end of its per-share earnings guidance for the entirety of 2023; the forecast now stands at $24.70 to $25.00 per share, while the average analyst estimate is $24.84.
