Wall Street expects UnitedHealth's limited presence on ACA exchanges to boost earnings

Investors expect positive news when UnitedHealth Group discloses its fourth-quarter earnings report on Thursday, in part because the nation's largest insurer has limited its participation in the federal and state insurance exchanges. The earnings report will provide insight into profit expectations for 2014.

The Minnetonka, Minn.-based insurer, the nation's largest, will be the first of the major publicly traded payers to detail final financial results for 2013. WellPoint, Aetna, Humana and other insurers will follow in the coming weeks.

After UnitedHealth's slightly disappointing third-quarter report, Deutsche Bank upgraded its rating last week for the company's stock from “hold” to “buy.” It also lifted United's price target from $74 to $85 a share. Deutsche Bank analysts cited, in part, the company's lack of significant exposure in the exchanges as a reason for their optimistic assessment. UnitedHealth says it is offering plans in only about 12 states.

Barclays is similarly bullish on UnitedHealth. In a research report released last week, analysts predicted that the company's revenues would grow by 5% in 2014, to $128.4 billion. Barclays also bumped the price target for the stock from $82 to $84 a share.

“As we look at the company today, we believe that UnitedHealth is particularly well positioned relative to its peer group,” Barclays concluded.

Burnished by these reports, UnitedHealth's stock last week hit its highest level in a year.

Meanwhile, HHS is expected to release new exchange enrollment numbers next week.

Follow Paul Demko on Twitter: @MHPDemko