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

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.