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On Monday, Truist Securities revised its price target for UnitedHealth Group (NYSE:UNH) stock, reducing it significantly from $580.00 to $360.00, while still recommending a Buy rating on the shares. The revision comes amid a challenging period for the stock, which has declined nearly 23% in the past week and 49% over the last six months. According to InvestingPro data, the stock’s RSI indicates oversold territory, potentially presenting an opportunity for value investors. The adjustment follows recent developments at the company, including last week’s suspension of its 2025 guidance and a notable management shift, with Stephen Hemsley taking over as CEO once again.
The firm’s analysts cited a "More Challenging Trend" as the reason for the downward revision. They noted that care activity trends are surpassing previous expectations due to various factors, such as the impact of new members at UnitedHealthcare (UHC), an acceleration in Medicare Advantage (MA) utilization, and signs of expanding trends in complex adjacent populations. Despite these challenges, InvestingPro analysis shows UnitedHealth maintains strong fundamentals with a P/E ratio of 12.2 and robust revenue growth of 8.06% in the last twelve months. These trends have led to increased utilization pressures, particularly in MA, in areas like outpatient and physician care.
In response to these pressures, UnitedHealth Group is expected to incorporate these higher trends into its 2026 MA bids in order to align with its MA target range by 2026. Truist Securities has also adjusted its earnings projections for UnitedHealth Group, lowering its estimated adjusted EPS for the years 2025 and 2026 to $21.72 and $24.78 respectively, from the prior estimates of $26.20 and $29.32.
The leadership change mentioned by Truist Securities involves the former CEO and current Chair of the Board, Stephen Hemsley, reassuming the CEO role. This transition comes at a time when the company is navigating through the challenges that have prompted the revised financial outlook.
UnitedHealth Group’s management has acknowledged the ongoing care activity trends and is taking measures to address them. While the short-term outlook has necessitated a reduction in the price target, Truist Securities maintains a positive long-term view on the stock, as reflected in the continuation of its Buy rating. The company’s financial health score remains "GOOD" according to InvestingPro, with strong cash flows sufficiently covering interest payments and a 33-year track record of consistent dividend payments. For deeper insights into UnitedHealth’s valuation and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, UnitedHealth Group has faced a series of significant developments affecting its financial outlook and investor sentiment. TD Cowen downgraded UnitedHealth’s stock from "Buy" to "Hold" and slashed the price target to $308, citing concerns about the company’s Risk Adjustment Factor scores and potential legal scrutiny. Raymond (NSE:RYMD) James also adjusted its earnings per share (EPS) estimates for UnitedHealth, reducing the 2025 EPS to $20 and the 2026 EPS to $23, highlighting the impact of one-time accounting gains in 2024. Meanwhile, RBC Capital Markets lowered its price target for UnitedHealth to $355, maintaining an Outperform rating, despite concerns over cost trends and Department of Justice activity.
Wolfe Research, however, maintained its $501 price target and Outperform rating, even as UnitedHealth is under investigation by the Department of Justice for potential Medicare fraud. The investigation focuses on UnitedHealth’s Medicare Advantage billing practices, although the company has stated it is unaware of any new activities by the DOJ. JPMorgan also revised its price target to $405, reflecting recent leadership changes and the suspension of 2025 guidance, while projecting a 10% year-over-year EPS growth for 2026.
These adjustments come amid ongoing scrutiny over UnitedHealth’s Medicare Advantage practices, with analysts expressing varying levels of confidence in the company’s long-term prospects. Investors are closely watching how UnitedHealth navigates these challenges, particularly in its Optum Health and Medicare Advantage segments. The evolving legal and industry landscape continues to shape analyst forecasts and investor expectations for UnitedHealth Group.
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