Stock market today: S&P 500 climbs as health care, tech gain; Nvidia earnings loom
On Wednesday, JPMorgan reiterated its Overweight rating and $405.00 price target for UnitedHealth Group (NYSE:UNH) shares. The healthcare giant, currently trading at a P/E ratio of 12.6x and showing strong profitability metrics according to InvestingPro data, has seen its shares decline by approximately 37% over the past year. The firm addressed recent media scrutiny over the company’s value-based contracts and hospitalization review processes, particularly incidents from 2019. Analysts at JPMorgan acknowledged the challenges in hospital admission decisions but indicated that rewarding facilities for low Admissions Per 1,000 (APK) is a standard practice aimed at managing care and preventing unnecessary hospitalizations. With an impressive EBITDA of $36.2 billion and robust cash flows that adequately cover interest payments, UnitedHealth maintains a "GOOD" overall financial health score.
The article in question, published by The Guardian, delved into UnitedHealth’s practices around APK and the handling of hospitalization decisions in collaboration with nursing facilities. Despite the concerns raised, JPMorgan analysts noted that these issues have been investigated previously, and the Department of Justice (DOJ) chose not to file charges against UnitedHealth.
JPMorgan’s stance is that the current valuation of UnitedHealth reflects an exaggerated reaction to the news. The analysts emphasized their constructive view on the company, suggesting that the market’s response to the article and the changes over the last six weeks might not fully account for the company’s fundamentals.
The firm’s commentary comes as investors are still processing the significant changes that have occurred within the healthcare sector and UnitedHealth Group over a relatively short period. JPMorgan’s continued support for the stock at the current price target suggests confidence in the company’s ability to navigate the complexities of healthcare management and the scrutiny that comes with it. InvestingPro analysis indicates the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of UNH among 1,400+ top US stocks.
In other recent news, UnitedHealth Group’s financial outlook continues to be a focal point for analysts and investors. Wolfe Research has maintained its Outperform rating for UnitedHealth, setting a revised price target of $390, while highlighting the company’s potential to improve margins in the Medicare Advantage segment. Bernstein SocGen Group also reiterated an Outperform rating with a $377 price target, underscoring the importance of Optum Health’s value-based care model, which manages around 5 million risk patients and generates substantial revenue. The firm projects Optum Health’s compound annual growth rate to slow to 8+% over the next four years due to a strategic shift towards improving margins.
Conversely, HSBC downgraded UnitedHealth’s stock from Hold to Reduce, lowering the price target significantly to $270. The analysts expressed concerns over the medical loss ratio and potential policy risks affecting Optum Rx. They also anticipate a prolonged recovery period for UnitedHealth, with potential Medicaid funding cuts posing additional risks. UBS provided insights from their 2025 Healthcare Insurance Symposium, noting that employers are facing rising healthcare costs and are exploring creative strategies to manage expenses while maintaining competitive benefits. These developments highlight the complexities UnitedHealth faces as it navigates market expectations and strategic challenges in the healthcare sector.
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