AI underweights weigh on large-cap funds performance says Goldman
Investing.com - Bernstein SocGen Group has lowered its price target on UnitedHealth Group (NYSE:UNH) to $377.00 from $594.00 while maintaining an Outperform rating. The healthcare giant, currently trading at $308.49 with a market capitalization of $280.4 billion, is showing signs of undervaluation according to InvestingPro’s Fair Value analysis.
The significant 36% reduction in price target reflects Bernstein’s expectation of weakness in UnitedHealth’s performance extending into 2025 and beyond, with growth projections now based on a lower earnings foundation.
Bernstein has reduced its earnings per share estimates for 2026 by 13% to $30.15, down from the previous estimate of $33.01, and has decreased its target price-to-earnings ratio by 31% to 12.5x from 18x.
The firm cited several factors for the downward revision, including reduced Medicare Advantage membership in 2026 as UnitedHealth shifts focus to margins, higher medical loss ratios in Medicare Advantage decreasing margins to approximately 1%, and slower growth in the company’s OptumHealth division.
Bernstein also noted its updated margin assessment of OptumHealth has led to modest reductions in projected margin improvements for the 2026-2029 period.
In other recent news, UnitedHealth Group has announced a quarterly cash dividend of $2.21 per share, which will be payable on September 23, 2025, to shareholders of record as of September 15, 2025. Additionally, UnitedHealth has attracted significant investment interest, with Berkshire Hathaway (NYSE:BRKa) purchasing 5 million shares during the second quarter, indicating confidence in the company’s prospects. Several other prominent investors have also increased their stakes in the company. Analysts have been active in revising their assessments of UnitedHealth, with BofA Securities raising its price target to $325 while maintaining a Neutral rating. Piper Sandler has reiterated an Overweight rating with a $280 price target, following a meeting with the company’s leadership. UBS continues to rate UnitedHealth as a Buy, with a $330 price target, after an investor lunch with management. UnitedHealth’s management has emphasized a strategic shift towards a "return to basics approach," focusing on strengthening operational foundations before pursuing further growth. These developments reflect ongoing interest and analysis of UnitedHealth’s financial and strategic positioning.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.