UnitedHealth stock price target cut to $520 by TD Cowen

On Monday, TD Cowen’s Ryan Langston adjusted the price target for UnitedHealth Group (NYSE:UNH) to $520.00, a reduction from the previous $609.00, while maintaining a Buy rating on the stock. The adjustment comes as UNH shares have declined over 22% in the past week, now trading near their 52-week low. According to InvestingPro data, the healthcare giant maintains a strong market position with a $395 billion market cap and trades at a P/E ratio of 17.9x. Langston revised the target after considering UnitedHealth’s first quarter results of 2025 and updated company guidance.

Langston’s report includes a revised earnings per share (EPS) forecast for UnitedHealth, decreasing the 2025 and 2026 estimates from $29.52 and $33.40 to $26.00 and $29.97, respectively. The new price target of $520 is based on 17.3 times the firm’s 2026 EPS estimate. InvestingPro analysis indicates the stock is currently undervalued, with 7 analysts recently revising their earnings expectations downward. The adjustment reflects a more conservative outlook following the company’s reported challenges.

UnitedHealth’s adjusted EPS guidance for 2025 was revised downward by approximately 12%, now ranging from $26.00 to $26.50. The decrease is attributed to several factors, including Medicare Advantage (MA) unit trends that were double the expectations, with levels anticipated to persist throughout 2025. Additionally, UnitedHealth experienced unexpected dynamics with lower coded membership in its Optum Health division and faced greater than expected version 28 headwinds.

Management at UnitedHealth highlighted broad-based elevated care trends, with particular pressure in the Employer Group Waiver Plan (EGWP) due to significantly higher member premiums leading to increased rates of elective utilization. Despite these challenges, InvestingPro data shows UNH maintains a "GREAT" financial health score of 3.08, with strong cash flows and a 33-year history of consistent dividend payments. The company also noted greater revenue challenges stemming from changes in Optum Health membership, as new members joined with lower than expected coding profiles, suggesting that health plans had not fully engaged these members.

In response to these trends, UnitedHealth management indicated that the insights from the heightened care activity will be incorporated into their strategy, ensuring that the 2026 MA bids are "fully informed" by the recent developments.

In other recent news, UnitedHealth Group has faced several adjustments to its financial outlook and analyst ratings. The company revised its full-year 2025 earnings guidance, now projecting $26.00-$26.50 per share, down from the previous estimate of $29.50-$30.00. This revision stems from challenges in its OptumHealth segment and higher costs in its Medicare Advantage plans. Analysts from Jefferies, KeyBanc, Oppenheimer, Truist, and Raymond (NSE:RYMD) James have all adjusted their price targets for UnitedHealth, citing these operational setbacks.

Jefferies reduced its price target to $530 while maintaining a Buy rating, emphasizing UnitedHealth’s potential to resolve its issues. KeyBanc lowered its target to $575 but retained an Overweight rating, suggesting confidence in the company’s ability to address its challenges by 2026. Oppenheimer set a new target of $600 and maintained an Outperform rating, expressing belief in UnitedHealth’s operational capabilities. Truist adjusted its target to $580, keeping a Buy rating, and highlighted the company’s strong cash flow and financial flexibility. Raymond James set a target of $540, maintaining a Strong Buy rating, while noting the specific challenges faced by UnitedHealth in its Medicare Advantage segment.

These developments underscore the company’s current hurdles, particularly in Medicare Advantage, but also reflect analysts’ cautious optimism about UnitedHealth’s ability to navigate these challenges and improve its performance in the coming years.

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