S&P 500 eases slightly from fresh record high after stronger economic growth
On Wednesday, KeyBanc analyst Matthew Gillmor revised the price target for UnitedHealth Group (NYSE:UNH) stock, lowering it to $450.00 from the previous target of $575.00. The stock, currently trading near its 52-week low of $309.10, has seen a significant 47% decline over the past six months. Despite the reduction, Gillmor maintained an Overweight rating on the healthcare conglomerate’s shares, which according to InvestingPro analysis appears undervalued at current levels.
Gillmor’s commentary addressed the recent CEO transition at UnitedHealth, noting it was anticipated given the company’s challenges over the past year. The unexpected element, according to the analyst, was the suspension of guidance, attributed to an unexpected acceleration in physician and outpatient costs. Despite these challenges, UnitedHealth maintains robust fundamentals with $410 billion in trailing twelve-month revenue and a P/E ratio of 12.9, significantly below industry averages.
The analyst expressed disappointment with the current update but remains optimistic that the issues affecting the company’s 2025 outlook can be resolved by 2026. Gillmor outlined specific actions for UnitedHealth to take, including the submission of conservative Medicare Advantage bids in June and the aggressive deployment of HouseCalls to improve documentation for new members.
Gillmor also acknowledged that restoring investor confidence in UnitedHealth would require time, with clear visibility into the company’s earnings recovery not expected until late 2025. Despite the near-term challenges, the Overweight rating suggests that KeyBanc continues to see long-term value in UnitedHealth shares at the revised price target.
In other recent news, UnitedHealth Group has been the focus of significant developments, starting with the unexpected withdrawal of its 2025 guidance. This announcement coincided with a leadership change, as Andrew Witty stepped down as CEO, and Stephen Hemsley returned to the role. Raymond (NSE:RYMD) James responded by downgrading UnitedHealth’s stock from Strong Buy to Market Perform, citing concerns over the company’s future visibility and revising its earnings per share estimates downward for 2025 and 2026. Meanwhile, Jefferies adjusted its price target for UnitedHealth to $400, while maintaining a Buy rating, highlighting challenges in the Medicare Advantage business as a key issue.
Truist Securities retained a Buy rating with a price target of $580, emphasizing the importance of UnitedHealth’s execution in navigating near-term challenges. Piper Sandler reiterated an Overweight rating with a $552 target, expressing confidence in Hemsley’s leadership to drive a potential turnaround. Bernstein maintained an Outperform rating and a $594 price target, viewing Hemsley’s return as a strategic move to address current operational challenges. These recent developments underscore the company’s focus on adjusting its strategies and leadership amid a rapidly changing healthcare landscape.
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