On Wednesday, Baird maintained an Outperform rating on UnitedHealth Group (NYSE:UNH) and increased the stock's price target to $640 from the previous $597. The firm expressed confidence in the healthcare giant, highlighting its performance and favorable valuation in comparison to the broader market.
UnitedHealth Group's stock experienced a significant rise, closing the session with a 6% gain, which notably outperformed the S&P 500's modest 0.6% increase. Baird underscored the company's attractive price-to-earnings (P/E) valuation, noting it stands at a 15% discount to the S&P 500. This is seen as an opportunity, especially as UnitedHealth Group's P/E has historically been on par with the S&P 500's average over the last decade.
The analyst from Baird suggested that the second quarter of 2024 results have provided clarity and set the stage for UnitedHealth to narrow its valuation gap with the S&P 500. The firm anticipates a positive 12-month outlook post-election day, citing historical data where managed care organizations (MCOs) have outperformed the S&P 500 by approximately 13% in the past three election cycles.
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