An analyst at Cantor Fitzgerald on Wednesday started coverage on several major healthcare providers.

UnitedHealth Group a “Buy”
The firm initiated coverage on UnitedHealth Group (UNH) with a “Buy” rating and $70 price target, suggesting a 16% upside to the stock’s Tuesday closing price of $60.36. The analyst commented, “Despite tough comparisons because of large favorable development in 2011, UnitedHealth continues to outperform the industry. Utilization has probably bottomed, but we expect higher loss ratios to be offset by operating efficiency and growth of the services businesses. Enrollment should help, because while we expect commercial to be flat, national accounts should grow as the market consolidates, and the company is well positioned in Medicare and Medicaid, with a national footprint, consumer focus, and a provider-friendly approach to managed care. We expect UnitedHealth’s earnings growth to be among the best in the group in 2012 and 2013.”

Aetna is a “Hold”
Cantor Fitzgerald started coverage on Aetna Inc. (AET) with a “Hold” rating and $45 price target, suggesting a 10% upside. The firm commented, “Aetna is not expensive relative to its historical valuations or by comparison with its peers, but rising utilization and tough comparisons with prior year periods that included substantial favorable development suggest that earnings growth will slow over the next two years. The company’s enrollment is under competitive pressure, and in an environment that is tough for everyone in the group, we do not see this pressure abating. We would like to see Aetna emphasize Medicare more, and we are encouraged by its recent progress with Medicaid mandates, but these initiatives will take time to implement.”

WellPoint also a “Hold”
Finally, the firm initiated coverage on WellPoint, Inc. (WLP) with a “Hold” rating and $75, implying a 4% upside. The analyst commented, “WellPoint marries a leading brand name with a national footprint and a lower cost structure that should deliver better returns than it has over the past couple of years. Adverse selection, losses in national accounts and a tough underwriting environment have been challenges, but cutting costs, making acquisitions, and buying back stock has helped offset some of this. We believe that WLP is relatively inexpensive at current levels, but would like to see a pickup in earnings growth and better enrollment momentum before buying.”

The Bottom Line
Shares of UnitedHealth Group (UNH) have a 1.41% dividend yield, based on last night’s closing stock price of $60.26. The stock has technical support in the $56 price area. The shares are trading near all-time highs. Shares of Aetna (AET) have a 1.71% dividend yield, based on last night’s closing stock price of $40.90. The stock has technical support in the $38 price area. If the shares can firm up, we see overhead resistance around the $44-$45 price levels. Shares of Wellpoint, Inc. (WLP) have a 1.60% dividend yield, based on last night’s closing stock price of $71.88. The stock has technical support in the $65 price area. If the shares can firm up, we see overhead resistance around the $74-$75 price levels.

None of the dividend stocks mentioned in this article are currently recommended by Dividend.com.

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