Update on UNH:
Since purchasing UNH a couple months back the stock has not done to much for our portfolio, however, now may be a good time to add to it rather than divesting our ownership. It has been well over ayear since the revelation of the stock options scandal forced UNH to restate 13 years worth of earnings, and make many management changes at crucial high level positions.
The stock is up over 25% since May of 2006, but still well below its record high of 65 in late 2005. It is currently trading at 16 times next years expected earnings, which is well below the majority of their competitors. Compounding the low forward P/E ratio is the fact that its long term earns growth rate is estimated at 16% a year, much higher than many if their competitors.
UNH has been successful by focusing on three distinct business segments: Selling health insurance, offering private Medicare plans, and providing technology to companies to help control costs.
This technology aspect will continue to grow in importance over time. Just recently UNH played a huge role in highlighting the risks of the arthritis drug vioxx. UNH was able to track client data and show a correlation between the increased health risks of taking the drug.
While there still may be some side effects from the options back dating scandals which occurred, with pending litigation still awaiting trial. Some analysts, such as Thomas Caroll, say that the fallout will not make a significant impact on future earnings.
While the stock has not done much for us, this is a solid stock, in a solid industry, with good long term growth prospects.
Dave Seaton
Saturday, August 4, 2007
Analyst General Guide Line
For Analysts the following is a general guide line in which you can follow.
What major companies are in your sector and what have they recently done?
What are the average Market Caps? Average P/E? Recent stock price performance?
What are some major events which have taken place in your sector?
What has the sector index done over the past couple of weeks?
What are other analysts and people saying about the sector or the companies in the sector?
In your opinion is there a catalyst that could drive money into or out of the sector?
All of this information could be easily found on YAHOO. It should not take long and there really is no right answer. It is the process of researching the sector and the information which you will get the most out of.
What major companies are in your sector and what have they recently done?
What are the average Market Caps? Average P/E? Recent stock price performance?
What are some major events which have taken place in your sector?
What has the sector index done over the past couple of weeks?
What are other analysts and people saying about the sector or the companies in the sector?
In your opinion is there a catalyst that could drive money into or out of the sector?
All of this information could be easily found on YAHOO. It should not take long and there really is no right answer. It is the process of researching the sector and the information which you will get the most out of.
I-Phone Hype
Some plays on the I-Phone:
Apple has seen a tremendous run up in their share price, a majority of which has been factored in from the great expectations that the I-Phone should bring them.
Rather than focusing on the I-Phone it may be a better idea to take a look at some of the other companies that could benefit from I-Phone success.
ATT (T) is the exclusive phone operator for the I-Phone in the U.S. In one article it said that they may have the most to gain since consumers will be crowding their stores for the phone and will most likely end up making additional purchases. I like this stock also because of the changes they are making to their CEO and their aggressiveness in breaking into the Internet and digital cable business.
Broadcom (BRCM) This chipmaker makes the technology for the phones touch screen controller. Beyond their success with apple this opportunity might open up the flood gates for future business with other phone providers. Another interesting spin is to look at a company like
NOKIA (nok). They have been in the high end phone market for a while, and may gain market share thanks to APPPLE opening people’s eyes and wallets to
Apple has seen a tremendous run up in their share price, a majority of which has been factored in from the great expectations that the I-Phone should bring them.
Rather than focusing on the I-Phone it may be a better idea to take a look at some of the other companies that could benefit from I-Phone success.
ATT (T) is the exclusive phone operator for the I-Phone in the U.S. In one article it said that they may have the most to gain since consumers will be crowding their stores for the phone and will most likely end up making additional purchases. I like this stock also because of the changes they are making to their CEO and their aggressiveness in breaking into the Internet and digital cable business.
Broadcom (BRCM) This chipmaker makes the technology for the phones touch screen controller. Beyond their success with apple this opportunity might open up the flood gates for future business with other phone providers. Another interesting spin is to look at a company like
NOKIA (nok). They have been in the high end phone market for a while, and may gain market share thanks to APPPLE opening people’s eyes and wallets to
Healthcare Industry Update Dave Seaton
The Healthcare care industry is a dynamic industry made up of many different individual segments such as:
Biotechnology
Diagnostic Substances
Drug Delivery
Drug Manufacturers - Major
Drug Manufacturers - Other
Drug Related Products
Drugs - Generic
Health Care Plans
Home Health Care
Hospitals
Long-Term Care Facilities
Medical Appliances & Equipment
Medical Instruments & Supplies
Medical Laboratories & Research
Medical Practitioners
Specialized Health Services
One of the areas that I would like to focus on is Long-Term Care facilities. This is a segment of the healthcare industry that will inevitably be a direct play on baby boomers. The top players in long term care on Market Cap alone are Manor Cadre New (HCR), Brookdale Senior Living (BKD), Sunrise Senior Living (Srz), and Kindred Healthcare (KND).
Just this past week Kindred Healthcare, Inc announced the opening of Kindred Hospital in Pittsburgh, Pennsylvania, and the acquisition of a skilled nursing center and assisted living residence formerly operated by The Greens Communities. I believe that we will see much more consolidation in the coming years when it comes to long term care providers.
Beyond long-term care there was other news which occurred this past week in other areas of the Health Care Industry.
On July 17, 2007 -- Working together with Chatsworth, CA-based Competition, Inc. and San Diego, CA-based Skylight Healthcare Systems, Scottsdale Healthcare is piloting the healthcare industry's first clinically validated digital room service meal ordering. This first-in-class application delivers a valid clinical dietary menu to patients who may then self-order meals directly from the bedside. This will be a service that will surely be desired by patients and may ultimately catch on if it can reduce long term costs, and increase efficiency.
On July 19, 2007 -- Strategic Initiatives In Healthcare®, LLC (SIH), a New Jersey based research consulting firm, announced today that it will begin marketing its portfolio of concepts effective August 1, 2007.
After devoting more than 36,000 hours of research and development toward the creation of innovative solutions to reconfigure and realign operating mechanisms of the nation's 4,000+ not-for-profit hospitals. Many of these initiatives involve overhauling many of the previous outdated efficiencies which have been common in the healthcare industry.
McKesson, the world’s largest healthcare services, automation and information technology company, t announced the successful implementation of its Horizon Prenatal Care™ solution at St. Luke’s Hospital-Allentown, Campus, part of St. Luke’s Hospital & Health Network, in northeastern Pennsylvania. The solution is the first obstetrics (OB)/prenatal information system designed to support continuity of care between the labor and delivery (L&D) department and other hospital departments and units. The system enables interaction with enterprise clinical systems to provide ready access to historical patient information and eliminate redundant charting in support of providing safer, more efficient care to baby and mother.
Healthcare REITS
Another interesting segment has been Healthcare RIETS (Real Estate Investment Trusts). These are companies primarily focused on investing in medical office buildings and other real estate related assets that have a direct relation to the healthcare industry.
While the whole healthcare REIT group has taken a beating his year It may be a good time to reconsider taking a look at healthcare REITS again. Towards the end of last year they got hot really shot too high. It was the new, big asset class and expectations exceed their fundamentals. However, with the beating in which they have taken over the previous couple of months, now may be a good time to reconsider.
One which may be of interest is Healthcare Realty Trust (HR) , a real estate investment trust that focuses on medical office buildings. The company began last year to divest its interests in other markets such as skilled nursing and senior housing.
Private Equity
On the private equity side Water Street Healthcare Partners, a Chicago private-equity firm focused exclusively on the healthcare industry, announced last week that it has completed a two-part investment, in which it has acquired majority ownership in Alpine Biomed to support the company's purchase of the neurology diagnostic product line from Medtronic, Inc. The transaction creates a global leader in specialty diagnostic devices and marks Water Street's fifth investment in the past year.
Alpine Biomed will now be the market leader in producing diagnostic products used for gastro esophageal reflux disease (GERD), commonly referred to as acid reflux disease, a condition afflicting more than 60 million Americans, as well as neurology diagnostic products used for conditions such as carpal tunnel syndrome and sleep disorders. Headquartered in Fountain Valley, California, Alpine Biomed has manufacturing facilities in Denmark, the United States and Vietnam.
International
Taking a more international perspective, healthcare in emerging countries will inevitably become incredibly valuable as countries begin to get other priorities in line.
One country is South Korea. The country overhauled its healthcare industry with the introduction of healthcare insurance and other such reforms after the Asian economic downturn of 1997 in order to cut costs and increase competition. The Government has actively supported and participated in the industry by declaring investor-friendly policies and tax incentives to attract foreign investors. It also encourages health promotion activities and provision of healthcare services to the poor and vulnerable sections of the rural population. This industry could witness tremendous growth in the next five to ten years, as the Government's promise to increase its healthcare as well as drug and pharmaceuticals R&D expenditure will bring in new drug development projects to the country. The Government's decision to reduce the reimbursement of branded drugs by 20.0 percent upon patent expiration will further drive drug development.
Biotechnology
Diagnostic Substances
Drug Delivery
Drug Manufacturers - Major
Drug Manufacturers - Other
Drug Related Products
Drugs - Generic
Health Care Plans
Home Health Care
Hospitals
Long-Term Care Facilities
Medical Appliances & Equipment
Medical Instruments & Supplies
Medical Laboratories & Research
Medical Practitioners
Specialized Health Services
One of the areas that I would like to focus on is Long-Term Care facilities. This is a segment of the healthcare industry that will inevitably be a direct play on baby boomers. The top players in long term care on Market Cap alone are Manor Cadre New (HCR), Brookdale Senior Living (BKD), Sunrise Senior Living (Srz), and Kindred Healthcare (KND).
Just this past week Kindred Healthcare, Inc announced the opening of Kindred Hospital in Pittsburgh, Pennsylvania, and the acquisition of a skilled nursing center and assisted living residence formerly operated by The Greens Communities. I believe that we will see much more consolidation in the coming years when it comes to long term care providers.
Beyond long-term care there was other news which occurred this past week in other areas of the Health Care Industry.
On July 17, 2007 -- Working together with Chatsworth, CA-based Competition, Inc. and San Diego, CA-based Skylight Healthcare Systems, Scottsdale Healthcare is piloting the healthcare industry's first clinically validated digital room service meal ordering. This first-in-class application delivers a valid clinical dietary menu to patients who may then self-order meals directly from the bedside. This will be a service that will surely be desired by patients and may ultimately catch on if it can reduce long term costs, and increase efficiency.
On July 19, 2007 -- Strategic Initiatives In Healthcare®, LLC (SIH), a New Jersey based research consulting firm, announced today that it will begin marketing its portfolio of concepts effective August 1, 2007.
After devoting more than 36,000 hours of research and development toward the creation of innovative solutions to reconfigure and realign operating mechanisms of the nation's 4,000+ not-for-profit hospitals. Many of these initiatives involve overhauling many of the previous outdated efficiencies which have been common in the healthcare industry.
McKesson, the world’s largest healthcare services, automation and information technology company, t announced the successful implementation of its Horizon Prenatal Care™ solution at St. Luke’s Hospital-Allentown, Campus, part of St. Luke’s Hospital & Health Network, in northeastern Pennsylvania. The solution is the first obstetrics (OB)/prenatal information system designed to support continuity of care between the labor and delivery (L&D) department and other hospital departments and units. The system enables interaction with enterprise clinical systems to provide ready access to historical patient information and eliminate redundant charting in support of providing safer, more efficient care to baby and mother.
Healthcare REITS
Another interesting segment has been Healthcare RIETS (Real Estate Investment Trusts). These are companies primarily focused on investing in medical office buildings and other real estate related assets that have a direct relation to the healthcare industry.
While the whole healthcare REIT group has taken a beating his year It may be a good time to reconsider taking a look at healthcare REITS again. Towards the end of last year they got hot really shot too high. It was the new, big asset class and expectations exceed their fundamentals. However, with the beating in which they have taken over the previous couple of months, now may be a good time to reconsider.
One which may be of interest is Healthcare Realty Trust (HR) , a real estate investment trust that focuses on medical office buildings. The company began last year to divest its interests in other markets such as skilled nursing and senior housing.
Private Equity
On the private equity side Water Street Healthcare Partners, a Chicago private-equity firm focused exclusively on the healthcare industry, announced last week that it has completed a two-part investment, in which it has acquired majority ownership in Alpine Biomed to support the company's purchase of the neurology diagnostic product line from Medtronic, Inc. The transaction creates a global leader in specialty diagnostic devices and marks Water Street's fifth investment in the past year.
Alpine Biomed will now be the market leader in producing diagnostic products used for gastro esophageal reflux disease (GERD), commonly referred to as acid reflux disease, a condition afflicting more than 60 million Americans, as well as neurology diagnostic products used for conditions such as carpal tunnel syndrome and sleep disorders. Headquartered in Fountain Valley, California, Alpine Biomed has manufacturing facilities in Denmark, the United States and Vietnam.
International
Taking a more international perspective, healthcare in emerging countries will inevitably become incredibly valuable as countries begin to get other priorities in line.
One country is South Korea. The country overhauled its healthcare industry with the introduction of healthcare insurance and other such reforms after the Asian economic downturn of 1997 in order to cut costs and increase competition. The Government has actively supported and participated in the industry by declaring investor-friendly policies and tax incentives to attract foreign investors. It also encourages health promotion activities and provision of healthcare services to the poor and vulnerable sections of the rural population. This industry could witness tremendous growth in the next five to ten years, as the Government's promise to increase its healthcare as well as drug and pharmaceuticals R&D expenditure will bring in new drug development projects to the country. The Government's decision to reduce the reimbursement of branded drugs by 20.0 percent upon patent expiration will further drive drug development.
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