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Here’s Why Morgan Stanley Analyst Is Bullish on UNH Stock
Wright noted that stocks of managed care organizations (MCOs) have been trending higher amid indications of softer utilization trends. As of Thursday’s closing, Wright’s revised price target of $453 implies 14.3% upside potential for UNH stock from current levels.
Interestingly, the 5-star analyst expects MCOs’ revenues and costs to benefit from artificial intelligence (AI)-driven efficiencies. Wright contends that the market has not yet priced in the impact of these AI tailwinds into the valuations of MCO stocks. The analyst expects AI tailwinds to drive about a 45% average upside in MCOs’ earnings per share (EPS) as efficiencies scale.
UNH stock has risen 20% year-to-date. The company delivered better-than-expected Q1 results and raised its full-year adjusted earnings guidance, indicating it is better positioned to manage high medical costs. Also, UnitedHealth announced a 5% hike in its quarterly dividend to $2.32 per share. UNH stock currently offers a yield of about 3%.
