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Monday, shares of UnitedHealth Group (NYSE:UNH), currently trading at $302.11 with a market capitalization of $274 billion, are in focus after Bernstein SocGen Group adjusted the company’s price target. Analysts at the firm have set a new target of $377, down significantly from the previous $594, while retaining an Outperform rating on the stock. According to InvestingPro data, the stock’s RSI indicates oversold territory, suggesting potential value at current levels.
The adjustment follows recent developments within UnitedHealth, namely the departure of CEO Andrew Witty and the appointment of Steve Hemsley as his successor. In light of these executive changes, the company has also suspended its 2025 guidance. Bernstein’s analysts have revised their earnings per share (EPS) estimates downward by 13% for 2026, now expecting a new next twelve months (NTM) EPS of $30.15, compared to the earlier estimate of $33.01. This aligns with broader analyst sentiment tracked by InvestingPro, which shows 19 analysts have recently revised their earnings expectations downward.
The reduced price target and EPS forecast stem from several factors anticipated to impact UnitedHealth’s performance. The analysts expect a strategic shift towards a margin focus in the 2026 Medicare Advantage (MA) bidding process, which is likely to result in decreased MA membership. Additionally, a projected higher medical loss ratio (MLR) in MA for 2025 is expected to compress margins to around 1%, establishing a lower earnings base for future growth.
Furthermore, the slower growth at OptumHealth, due to the reduced MA growth at UnitedHealthcare, and a modest downward revision in the margin improvements for OptumHealth for the years 2026 to 2029, have also been factored into the revised price target. The target price-to-earnings (PE) ratio for UnitedHealth has been adjusted to 12.5x, a 31% decrease from the previous 18x, reflecting the anticipated changes in the company’s financial outlook. Currently trading at a P/E ratio of 12.44, InvestingPro analysis indicates the stock is undervalued relative to its Fair Value, with additional insights available in the comprehensive Pro Research Report covering this healthcare giant.
In other recent news, UnitedHealth Group has experienced a series of significant developments. Truist Securities has lowered its price target for the company from $580 to $360 while maintaining a Buy rating, due to increased utilization pressures in Medicare Advantage and a management shift with Stephen Hemsley returning as CEO. TD Cowen downgraded UnitedHealth from Buy to Hold, reducing the price target to $308, citing concerns over the company’s Risk Adjustment Factor scores and potential legal scrutiny. RBC Capital Markets also reduced its price target to $355, maintaining an Outperform rating amid concerns about rising costs and DOJ activity. Meanwhile, Raymond (NSE:RYMD) James adjusted its earnings estimates, citing low-quality, non-recurring gains, and maintained a Market Perform rating. Wolfe Research continued to support UnitedHealth with an Outperform rating and a $501 price target, despite an ongoing DOJ investigation into Medicare fraud. These recent developments reflect a complex landscape for UnitedHealth, with analysts adjusting their expectations amid industry changes and legal uncertainties.
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