UnitedHealth comments readthrough to Evolent Health overblown, says Canaccord

Canaccord analyst Richard Close notes that shares of Evolent Health (EVH) have declined 3%-4% following UnitedHealth’s (UNH) commentary at a conference alluding to higher levels of outpatient procedures and the likely impact of greater medical care ratio in Q2. The insurer called out hips, knees, and senior business that were showing strong outpatient activity and that there may be a situation of pent-up or delayed demand. As a result of these comments, other MCOs and companies that are exposed to medical costs/loss trends traded lower, including Evolent Health. Initially Canaccord viewed this as an overreaction and confirmed it after following up with Evolent management. The firm would use the pullback, which it views as an overreaction, either to establish a position or add to existing positions. Canaccord has a Buy rating on Evolent’s shares with a price target of $47.