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Analysts favor UnitedHealth's long-term prospects

The Associated Press

UnitedHealth Group Inc. faces some near-term pressure due in part to Medicare Advantage rate cuts, but analysts still see long-term growth prospects for the nation's largest health insurer.

The Minnetonka, Minn., company became the first insurer to report fourth-quarter earnings on Thursday. UnitedHealth said its net income jumped 15 percent, and its executives then spent some time discussing with analysts on a conference call the challenges that lie ahead in the new year.

That includes another round of cuts to Medicare Advantage plans, which are privately run versions of the government program that covers health care costs for the elderly and disabled people.

THE OPINIONS: The entire managed care sector likely will perform in line with the broader market during this year's first quarter, according to Stifel analyst Thomas A. Carroll. But he said in a research note that it should gain traction in the year's second half, and UnitedHealth shares are "worth owning and adding to when pressured."

Goldman Sachs analyst Matthew Borsch said in a separate note he was lowering his UnitedHealth earnings-per-share estimates for this year and next due mainly to pressures like the Medicare Advantage cuts. But he expects 16 percent EPS growth by 2016.

THE STOCK: UnitedHealth shares finished at $72.76 on Thursday, down 2.8 percent, or $2.08 per share. The shares had hit an all-time high price of $77.33 on Jan. 7.