What You Don't Know About UnitedHealth Could Cost You, Say FBR Analysts

• UnitedHealth Group Inc UNH shares have gained 20 percent year-to-date, oscillating around the $120 mark since March.
• FBR & Co’s Steven Halper maintained an Outperform rating on the company, with a price target of $135.
• In view of Optum's performance and future outlook, Halper believes that UnitedHealth’s shares should trade at a higher valuation.

Analyst Steven Halper expressed optimism regarding Optum’s performance and prospects, after meeting with the senior management of Optum and OptumLabs in Cambridge, Massachusetts. “OptumLabs, which is part of OptumInsight, partners with providers, employers, and payers in a collaborative fashion to develop solutions that help eliminate friction in the care delivery process.”

The organization aims at improving relationships with these entities, so as to position Optum for continued growth. “We believe that Optum's strategy (beyond OptumRx), is not well understood by the investment community,” Halper added.

Several of tuck-in acquisitions made by UnitedHealth and Optum have gone “unnoticed by investors,” while these are the “building blocks of its operating strategy.” Halper added, “We believe efforts such as OptumLabs serve to improve Optum's profile but also drive sales of Optum products and services to its research partners.”

Given Optum’s robust growth, Halper expects UnitedHealth’s shares to trade at higher valuation levels. “We maintain our view that UNH should be a core holding for established growth investors, given the company's diversified business model, strong free cash flow, and track record in efficiently redeploying capital,” the FBR & Co report stated.