This health insurance ‘behemoth’ can rally more than 20%, says Piper Sandler

Piper Sandler is bullish on UnitedHealth , which it says is an industry-leader in the health care benefits business. The firm initiated coverage with an overweight rating and a price target of $580, which implies shares rallying 21.4% from where they closed on Thursday. UnitedHealth operates UnitedHealthcare as well as Optum. Optum, which was launched in 2011, is a complementary business to UnitedHealthcare. It includes services such as health care delivery and a deposit banking business under its Optum Health division, in addition to an analytics segment and pharmacy care services business under Optum Insights and Optum Rx. UNH YTD mountain UNH in 2023 “UNH is a behemoth in healthcare contributing 7.7% of U.S. healthcare spending today from their UnitedHealthcare and Optum segments. We expect UNH to deliver $28.19 in FY24 adjusted EPS, representing 13.7% y/y growth,” analyst Jessica Tassan wrote in a Thursday note. “The future, however, resides in Optum,” she added. “Over the next decade, we believe Optum Health, Optum Insight and Optum Rx will increasingly serve as the front door to UNH,” she added. Tassan added that UnitedHealthcare has been the largest payer by premium in the U.S. health insurance market for the last 10 years, and it is well-positioned for growth. “UNH has innovated its way to market leadership for decades. We believe breadth and scale give[s] UnitedHealthcare advantages in terms of risk selection; consumer influence; supply chain efficiency; network rates; and distribution,” Tassan said. “These advantages mean UnitedHealthcare can [repeatedly] offer market-leading products at highly competitive prices.” The stock is down nearly 10% year to date. It’s also lost more than 4% over the past 12 months. —CNBC’s Michael Bloom contributed to this report.