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Investing.com - Piper Sandler reduced its price target on UnitedHealth Group (NYSE:UNH) to $317.00 from $353.00 on Tuesday, while maintaining an Overweight rating on the healthcare giant’s stock. The stock, currently trading at $261.53, has declined nearly 44% year-to-date, though InvestingPro analysis suggests it may be undervalued at current levels.
The price target adjustment follows UnitedHealth’s second-quarter earnings call for 2025, which Piper Sandler described as showing "unprecedented transparency" into the company’s business mix, earnings drivers, and pricing assumptions across its UnitedHealthcare and Optum divisions. The company maintains strong fundamentals with a P/E ratio of 11.03 and robust free cash flow yield.
The firm acknowledged that UnitedHealth’s adjusted earnings per share floor of $16.00 for calendar year 2025 fell below market expectations of $18.00-19.00, but recommended buying the stock on the resulting weakness.
Piper Sandler expressed confidence that UnitedHealth has "correctly diagnosed its problems" and established a "coherent, multi-dimensional path to remediation" that could support high-teens adjusted EPS compound annual growth rate in calendar years 2026 and 2027.
The revised price target was calculated by applying an unchanged 15.0x target adjusted EPS multiple to calendar year 2027 estimates and discounting the result back one year at a 5.06% weighted average cost of capital.
In other recent news, UnitedHealth Group reported its second-quarter earnings, revealing a mixed financial performance. The company’s earnings per share (EPS) came in at $4.08, falling short of the expected $4.45, which marks an 8.31% surprise miss. Despite this, UnitedHealth saw a 13% increase in revenue year-over-year, reaching $112 billion. In terms of analyst ratings, Mizuho (NYSE:MFG) maintained its Outperform rating for UnitedHealth, setting a price target of $350.00, based on the company’s outlook for 2025 and 2026. However, BofA Securities adjusted its price target for UnitedHealth to $300.00 from $350.00, citing a slower-than-expected recovery pace. The healthcare giant has also indicated that it expects pricing pressure and elevated medical cost trends to persist through 2026, with projected negative margins in its Medicaid business by that time. These developments reflect ongoing challenges and adjustments in the company’s financial landscape.
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