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Investing.com - Baird downgraded UnitedHealth Group (NYSE:UNH) from Neutral to Underperform on Thursday, slashing its price target to $198.00 from $312.00, representing potential downside of 26%. The stock, which has already declined over 50% in the past six months, is currently trading near its 52-week low of $248.88.
The downgrade follows Baird’s risk adjustment factor (RAF) analysis that raised concerns about OptumHealth, which were subsequently confirmed by UnitedHealth’s second-quarter 2025 earnings report.
UnitedHealth has lowered its long-term value-based care (VBC) margin expectations to 5%, with Baird noting that the total version 28 (v28) implied headwind appears to be close to 20% over three years.
Baird expressed low conviction in UnitedHealth’s ability to maintain 1% VBC margins in 2026, citing minimal successful offsets through Year 2 and questioning whether re-coding back to pre-v28 levels is realistic.
The research firm also indicated that other segments of UnitedHealth’s business now appear more challenged, contributing to its bearish outlook on the company’s current valuation.
In other recent news, UnitedHealth Group has faced a series of analyst revisions and ratings changes. Fitch Ratings revised the company’s outlook to negative from stable, although it affirmed the insurer’s financial strength ratings at ’AA-’. KeyBanc lowered its price target for UnitedHealth to $350 from $400, maintaining an Overweight rating and noting the need for a credible earnings per share baseline. Similarly, RBC Capital reduced its price target to $286 from $355, citing margin headwinds and new earnings guidance setting an "EPS floor."
Cantor Fitzgerald maintained its Overweight rating with a $440 price target, identifying a potential turning point for UnitedHealth. The firm adjusted its earnings per share estimates significantly lower for 2025 but projected growth in the following years. UBS kept its Buy rating and a $330 price target, as UnitedHealth continues to navigate challenges related to Medicare Advantage. The company is projecting a 10% cost trend assumption for Medicare Advantage in 2026, with current trends expected to continue into the next year. These developments highlight the varied perspectives among analysts regarding UnitedHealth’s future performance.
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