On Thursday, Piper Sandler analyst adjusted the price target for UnitedHealth Group (NYSE:NYSE:UNH) stock, reducing it slightly from $605.00 to $600.00. The firm maintained its Overweight rating on the $465.9 billion healthcare giant's shares, signaling confidence in the company's performance.
According to InvestingPro data, UNH maintains a "GOOD" overall financial health score, with strong profitability metrics. The modification in the price target reflects changes made to align with the company's guidance for the calendar year 2025, with earnings results expected in 13 days.
The analyst noted that if UnitedHealth meets the consensus estimates for its fourth-quarter 2024 results, it would mark a compound annual growth rate (CAGR) of 12.8% in adjusted earnings per share (EPS) from the calendar year 2019 to 2024. The company has demonstrated solid growth, with revenue increasing by 9.42% in the last twelve months.
Over the past five years, UnitedHealth has traded at an average price-to-earnings (P/E) multiple of 18.2 times for the second year (CY2) earnings, though it currently trades at a higher multiple of 32.77x.
Looking ahead, Piper Sandler expects UnitedHealth to continue achieving its long-term EPS growth target of 13.0-16.0% and to sustain an earnings CAGR at least in line with its historical performance. The analyst believes that the company's consistent fundamentals warrant a stable P/E multiple.
The revised price target of $600 is based on applying an 18.2x multiple to Piper Sandler's estimated adjusted EPS of $33.02 for the calendar year 2026. The analyst finds support for the new price target in both historical precedent and analytical models. The report includes a 10-year valuation summary and a two-stage dividend discount model test, which further substantiate the firm's position.
In other recent news, UnitedHealth Group and Amedisys (NASDAQ:AMED) have extended the deadline for their $3.3 billion merger agreement amid scrutiny from the U.S. Department of Justice and several states. The merger, which would expand UnitedHealth's presence in the home health sector, was previously expected to close by late December. Now, the deadline has been pushed to 10 days after a final court decision or until the end of 2025.
Raymond (NS:RYMD) James recently highlighted UnitedHealth stock as an attractive investment, based on its current valuation and expectations of improving fundamentals. The firm also expressed confidence in UnitedHealth's projections for 2025 and anticipates the company's stock to gain strength over the year.
In a tragic development, Luigi Mangione, the suspect in the murder of UnitedHealth Group's CEO, Brian Thompson, pleaded not guilty to charges including murder as an act of terrorism. If convicted, Mangione could face a life sentence without parole.
Lastly, stocks of UnitedHealth, along with CVS Health (NYSE:CVS) and Cigna Corp (NYSE:CI), have seen an increase following the reassessment of the impact of new healthcare provisions. These provisions, expected to take effect in 2028, aim to increase transparency and accountability within the pharmacy benefit managers industry.
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