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Investing.com - Mizuho (NYSE:MFG) maintained its Outperform rating and $350.00 price target on UnitedHealth Group (NYSE:UNH), a $242 billion healthcare giant with annual revenues exceeding $410 billion, following the company’s update on its 2025 and 2026 outlook. According to InvestingPro analysis, the stock appears undervalued at current levels, trading at a P/E ratio of 11.1x.
The healthcare giant indicated that pricing pressure and elevated medical cost trends are expected to persist through 2026, with specific challenges including projected negative margins in its Medicaid business by 2026.
UnitedHealth disclosed that Medicare Advantage costs are expected to trend toward 10% in 2026, up from an assumed 7.5% in 2025, while commercial group costs are tracking at 11%, which is 100 basis points above original expectations.
The company has reduced its long-term margin range for Optum Health to 6-8% from the previous 8-10% range, and adjusted Medicare Advantage margins to 2-4% from the prior 3-5% target.
While UnitedHealth did not explicitly reaffirm its long-term growth guidance of 13-16%, Mizuho anticipates mid-single digit growth in 2026 with potential for low double-digit growth in 2027, depending on cost trends.
In other recent news, UnitedHealth Group reported its second-quarter earnings, revealing a mixed financial performance. The company’s earnings per share (EPS) came in at $4.08, which fell short of the forecasted $4.45, marking an 8.31% miss. However, UnitedHealth saw a 13% increase in revenue year-over-year, reaching $112 billion. Despite the revenue growth, the earnings miss raised concerns among investors. Additionally, BofA Securities adjusted its price target for UnitedHealth, lowering it from $350 to $300 while maintaining a Neutral rating. This adjustment reflects BofA’s view that UnitedHealth’s recovery may be slower than previously anticipated. These developments highlight recent challenges and assessments facing UnitedHealth.
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