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On Monday, Oppenheimer analysts revised their outlook on UnitedHealth Group (NYSE:UNH), lowering the price target from $640.00 to $600.00. Despite this adjustment, the firm maintained its Outperform rating on the healthcare giant’s shares, which currently trades near its 52-week low of $438.50. According to InvestingPro analysis, UNH appears undervalued with a GREAT financial health score of 3.08. The revision follows UnitedHealth’s announcement of reduced full-year 2025 earnings guidance, now projecting $26.00-$26.50 per share compared to the previously estimated range of $29.50-$30.00.
The forecasted earnings dip is attributed to several factors. Approximately two-thirds of the decline in guidance is due to revenue-related issues within OptumHealth, such as coding practices that do not adequately reflect health conditions and changes to the Medicare Advantage risk model. The remaining one-third of the guidance reduction is linked to UnitedHealth experiencing a higher cost trend towards the end of the first quarter of 2025, which may be seasonal. However, management has chosen to incorporate this trend into the guidance for the remainder of 2025 and the 2026 Medicare Advantage bids.
In response to the updated company guidance, Oppenheimer also adjusted its earnings per share (EPS) estimates for UnitedHealth for the years 2025 to 2027. The new EPS forecasts are set at $26.06, $30.37, and $33.77 for the respective years, down from the previous estimates of $29.77, $33.78, and $37.56. Despite these changes, Oppenheimer’s analysts expressed confidence in UnitedHealth’s operational excellence and its ability to address the current issues throughout 2025, potentially mitigating any long-term impact for 2026. For deeper insights into UNH’s valuation and growth prospects, access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, UnitedHealth Group reported its Q1 2025 earnings, revealing a slight miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $7.20, below the expected $7.29, and reported revenue of $109.6 billion, falling short of the $111.5 billion forecast. Following this, UnitedHealth revised its EPS outlook for 2025 to a range of $26 to $26.50. Analyst firms Truist Securities and Raymond (NSE:RYMD) James responded by lowering their price targets for UnitedHealth shares to $580 and $540, respectively, while maintaining positive ratings. Truist retained a Buy rating, while Raymond James kept a Strong Buy rating. The adjustments were influenced by UnitedHealth’s updated guidance and first-quarter performance, which highlighted challenges in the Medicare Advantage risk segment. Despite these challenges, analysts noted UnitedHealth’s solid cash flow and financial flexibility as strengths. The company is also focusing on cost containment and innovation in healthcare delivery.
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