BofA’s Hartnett says concentrated U.S. stock returns are likely to persist
On Tuesday, Piper Sandler analysts lowered the price target for UnitedHealth Group (NYSE: NYSE:UNH) stock to $353 from $552 while maintaining an Overweight rating. This adjustment comes as UnitedHealth, currently trading at a P/E ratio of 12.6 with a market capitalization of $276 billion, embarks on a strategic turnaround plan. According to InvestingPro analysis, the stock appears undervalued at current levels.
The announcement followed remarks by CEO Stephen Hemsley at the Annual Shareholder Meeting, where he emphasized the company’s commitment to reliability, excellence, and transparency. The repricing at UnitedHealthcare (UHC) marks the initial phase in a three-year transformation strategy for the healthcare giant, which generated over $410 billion in revenue last year.
The company’s recent Medicare Advantage bids, submitted on Friday, focused on improving margins while addressing increased care activity observed in the first half of the year. Optum Health is also realigning its focus on value-based care and prioritizing clinical outcomes with significant economic impacts.
Piper Sandler’s revised price target reflects a 15x multiple of lower estimated adjusted earnings per share for 2026, down from a previous 18x multiple. This adjustment considers UnitedHealth’s execution risks and its management team’s capabilities.
In other recent news, UnitedHealth Group has been the focus of several significant developments. Analysts from Wolfe Research maintained an Outperform rating for UnitedHealth, setting a price target of $390, while projecting earnings per share (EPS) of $21-$22 by 2025. However, they noted uncertainty due to the company’s "opaque" commentary and market anxiety ahead of the second-quarter earnings report. Meanwhile, JPMorgan reiterated its Overweight rating with a $405 target, addressing media scrutiny over UnitedHealth’s value-based contracts and hospitalization review processes, while expressing confidence in the company’s fundamentals. KeyBanc also adjusted its outlook, lowering the price target to $400 from $450, while maintaining an Overweight rating, citing a potentially overly pessimistic view on the company’s Medicare Advantage margins.
Additionally, UnitedHealth’s new CEO, Stephen Hemsley, emphasized strategic plans and pricing discipline for Medicare Advantage bids, with further details expected in the upcoming earnings report. In a corporate governance update, Andrew Witty resigned as a director, effective immediately, with the company not providing a reason for his departure. Lastly, TD Cowen maintained a Hold rating with a $308 price target, with analysts noting the company’s cautious outlook for 2025 and 2026. These developments collectively highlight the ongoing strategic, financial, and governance changes at UnitedHealth Group.
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