Palm Beach, FL 11/30/11 (StreetBeat) --Health insurer UnitedHealth Group Inc. (NYSE: UNH) left a positive impression for long-term growth after its annual investor meeting on Tuesday highlighted opportunities to expand its business, according to a Jefferies analyst.Analyst David Windley said in a Wednesday research note he was raising his price target on the stock to $60 from $58 to reflect "increased confidence" in the Minnetonka, Minn., company's earnings potential.
UnitedHealth is the largest health insurer based on total revenue and the second-largest based on enrollment, trailing WellPoint Inc (NYSE: WLP). It expects 2012 earnings of between $4.55 and $4.75 per share on $107 billion to $108 billion in revenue, a forecast analysts have deemed conservative.
That outlook doesn't count gains from its recently announced acquisition of Medicare Advantage plan provider XL Health Corp. and doesn't factor upside from cash deployment, Windley said.
The analyst also said UnitedHealth's Optum business will become an increasingly important part of the company's growth. That segment provides services like health management and wellness programs, technology outsourcing and pharmacy benefits.
UnitedHealth will spend $115 million on its OptumRx business next year, as it prepares to handle pharmacy benefits business it used to give to Medco Health Solutions Inc (NYSE: MHS).
Windley said Optum's service businesses make up more than 20 percent of the company's revenue and are growing faster than the company's UnitedHealthcare segment, which focuses on health insurance. He noted that UnitedHealth projects double-digit, long-term earnings and revenue growth for Optum.
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