KeyBanc cuts UnitedHealth price target to $575, retains overweight

On Monday, KeyBanc Capital Markets adjusted its outlook on UnitedHealth Group (NYSE:UNH) shares, reducing the price target to $575 from the previous $650. The stock, currently trading at $430.71, has experienced a significant 22.65% decline over the past week. Despite a disappointing first quarter update from the healthcare giant, the firm maintained its Overweight rating on the stock. According to InvestingPro data, seven analysts have recently revised their earnings estimates downward for the upcoming period.

UnitedHealth’s first-quarter performance in 2025 was notably underwhelming, with Medicare Advantage proving to be a significant challenge. Despite the setbacks, the company maintains strong fundamentals with revenue growth of 8.06% and an impressive market capitalization of $395.43 billion. The company faced revenue pressures related to Risk Adjustment Factor (RAF) and experienced increased outpatient and physician utilization. According to KeyBanc’s analyst, these issues appear to be specific to UnitedHealth and potentially rectifiable by 2026. InvestingPro’s Financial Health Score of 3.08 ("GREAT") suggests the company remains fundamentally sound.

The analyst pointed out that UnitedHealth has identified these challenges early in the year, which could be seen as a positive. This early detection allows the company to enhance RAF coding for the year 2026 and incorporate the higher utilization rates into its June bids. Furthermore, a stronger Medicare Advantage rate update expected for 2026 could aid in the company’s recovery.

Competitors in the Medicare Advantage space, such as Humana (NYSE:HUM) and CVS Health (NYSE:CVS), are not in a position to capitalize on UnitedHealth’s current setbacks, as per the analyst’s observations. This competitive dynamic could provide some cushion for UnitedHealth as it works through its current challenges.

Investors may have concerns that UnitedHealth’s issues could be indicative of broader problems, but KeyBanc’s stance suggests confidence in the company’s ability to address and overcome these hurdles. Trading at a P/E ratio of 18.03 and maintaining a strong dividend growth track record, the company shows resilience despite current challenges. The firm’s revised price target reflects a tempered optimism, acknowledging the struggles but also the potential for UnitedHealth to correct course in the near future. For deeper insights into UnitedHealth’s valuation and growth prospects, including 13 additional ProTips and comprehensive analysis, visit InvestingPro.

In other recent news, UnitedHealth Group has reported its first-quarter 2025 earnings, missing both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $7.20, falling short of the expected $7.29, and reported revenue of $109.6 billion, below the forecasted $111.5 billion. Following this, UnitedHealth revised its 2025 EPS outlook to a range of $26.00 to $26.50, down from a previous estimate of $29.50 to $30.00. Analysts from Raymond (NSE:RYMD) James, Oppenheimer, and Truist have all adjusted their price targets for UnitedHealth, with Raymond James setting a new target of $540, Oppenheimer at $600, and Truist at $580, while maintaining various positive ratings on the stock. The adjustments in earnings guidance are largely attributed to challenges in the Medicare Advantage segment, particularly within OptumHealth, due to coding practices and changes in member profiles. Despite these challenges, analysts from Oppenheimer and Truist expressed confidence in UnitedHealth’s operational capabilities and financial flexibility. UnitedHealth continues to focus on cost containment and innovation in healthcare delivery as it navigates these ongoing challenges.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.