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Investing.com - Leerink Partners has reduced its price target on UnitedHealth Group (NYSE:UNH), a $272.67 billion healthcare giant currently trading at 12.5 times earnings, to $340.00 from $355.00 while maintaining an Outperform rating on the stock. According to InvestingPro analysis, the stock appears undervalued at current levels.
The firm noted that investor expectations have been "moderately fading" over the past month as the market awaits UnitedHealth’s reinstatement of its 2025 financial guidance.
Leerink Partners indicated that the market generally expects earnings in the range of $18 to $19 per share, suggesting that guidance within this zone should alleviate concerns given the "materiality of the reduction in overall margins."
The analyst report suggested that such guidance would establish groundwork for a "multi-year margin story," with growth potentially accelerating in 2027 as UnitedHealth exits V28.
Despite what Leerink Partners described as a "challenging and dynamic backdrop," the firm remains "cautiously optimistic" on the positive investment thesis for UnitedHealth Group.
In other recent news, UnitedHealth Group has been under scrutiny with the Justice Department’s investigation into its Medicare billing practices. This probe, which includes inquiries from the FBI and the Department of Health and Human Services, examines how the company managed diagnoses that could have increased Medicare payments. Additionally, UnitedHealth has made significant leadership changes, appointing Mike Cotton as the new head of its Medicaid segment and expanding Bobby Hunter’s role to oversee both Medicaid and Medicare programs. These changes come as Stephen Hemsley returns as CEO, leading to further management shifts, including Amar Desai stepping down as CEO of Optum Health. On the financial front, UBS has lowered its price target for UnitedHealth to $385, reflecting concerns over margin pressures, particularly in Medicare Advantage. Wolfe Research also adjusted its price target to $330, citing earnings pressures for 2025. UnitedHealth’s Optum Health division, which generated approximately $105 billion in revenue in 2024, remains a focal point in these evaluations. The company plans to reissue its 2025 earnings guidance during its upcoming second-quarter earnings report.
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