Morgan Stanley Maintains on UnitedHealth Group as 2014 Transition Leads to 2015 Growth

In a report published Wednesday, Morgan Stanley analyst Andrew Schenker maintained Overweight on UnitedHealth Group (NYSE: UNH) as 2014 transition leads to 2015 growth and beyond. According to the report, the analysts continue to view 2014 as a transition year for UNH as the business positions for future growth. “Reform leads to increased seasonality in 2014. We have updated our model to reflect reform-related costs in 1H14 including the Medicaid industry fee and Medicare funding pressure. As a result, we now expect UNH will achieve roughly 40% of its earnings in 1H14 and 60% of its earnings in 2H14. We now model FY14 EPS of $5.59 vs $5.60 previously, after adjusting for 4Q13 results. Additionally, we have maintained our FY15 EPS of $6.12, which represents 9% Y/Y EPS growth. Despite near-term headwinds, we believe UNH's long-term earnings power remains intact.”UNH closed Tuesday at $73.32.