UnitedHealth price target lowered to $385 at UBS on margin concerns

Published 25/06/2025, 15:50
UnitedHealth price target lowered to $385 at UBS on margin concerns

Investing.com - UBS lowered its price target on UnitedHealth Group (NYSE:UNH) stock to $385 from $400 on Wednesday, while maintaining a Buy rating. According to InvestingPro data, UNH is currently trading at $301.47, significantly below its Fair Value, with a P/E ratio of 12.53 and strong free cash flow yield.

The price target reduction follows comments from UnitedHealth’s returning CEO at the company’s June 2 annual meeting, where he indicated management would reinstate its 2025 outlook during the second-quarter earnings release scheduled for July 29. The healthcare giant, with a market capitalization of $273.56 billion, has maintained solid revenue growth of 8.06% over the last twelve months.

UBS noted that CEO Hemsley’s characterization of the upcoming outlook as "prudent" has led the investment community to interpret this as a signal that guidance may be more conservative than the June 2 consensus of $22.50 earnings per share.

The firm reported that investor expectations have recently shifted toward a $20 EPS estimate for 2025, prompting UBS to revise its own projections to align with this outlook.

UBS has reduced its expectations for Medicare Advantage margin by an additional 50 basis points to 1.5% and lowered its Optum Health margin forecast to 4.5% from 5.0% previously.

In other recent news, UnitedHealth Group has been in the spotlight with several key developments. Moody’s Ratings affirmed UnitedHealth’s A2 long-term issuer rating but changed the outlook to negative, citing challenges such as higher medical costs in Medicare Advantage and ongoing investigations into billing practices. Meanwhile, Jefferies lowered the price target for UnitedHealth stock to $399 while maintaining a Buy rating, acknowledging Medicare Advantage headwinds but expressing confidence in long-term prospects. UnitedHealth is also considering bids for its Banmedica subsidiary in Latin America, with offers reportedly around $1 billion, as the company evaluates its global strategy. CVS Health (NYSE:CVS) experienced a positive development with the removal of Medicare PBM limits from a tax bill, benefiting its Caremark division. Additionally, health insurers, including UnitedHealth, have pledged to simplify prior authorization processes following a meeting with U.S. health officials. These recent developments reflect ongoing adjustments and strategic evaluations within the healthcare industry.

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