UnitedHealth competition won’t impact Livongo near term, says KeyBanc

KeyBanc analyst Donald Hooker reiterates an Overweight rating on Livongo Health (LVGO) with a $105 price target after UnitedHealth (UNH) yesterday launched a competitive digital diabetes service. The stock closed yesterday down 8%, or $8.30, to $97.38. The analyst does not expect any impact to Livongo’s near-term results, noting that UnitedHealth is not a channel partner. Also, it appears that UnitedHealth’s new diabetes service will be “channel-limited” to its own client base, Hooker tells investors in a research note titled “Imitation Is the Greatest Form of Flattery.” Further, Livongo to date has demonstrated high client retention of 94%, adds the analyst. In a “bull-case” scenario, he sees UnitedHealth’s entry into the digital diabetes space as an accelerant for Livongo. The move could put competitive pressure on regional Blues and other health plans to more aggressively feature their own digital diabetes solution, says Hooker. In a “bear-case” scenario, UnitedHealth’s Level2 launch could make it more difficult for Livongo to prospect within UnitedHealth’s small- and mid-sized employer client base, notes the analyst.