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Investing.com - Wolfe Research lowered its price target on UnitedHealth Group (NYSE:UNH) to $330 from $363 while maintaining an Outperform rating, citing multiple pressures on the company’s 2025 earnings outlook. According to InvestingPro data, the healthcare giant, currently valued at $274.8 billion, is trading significantly below its Fair Value, with analysts maintaining a bullish consensus despite six recent downward earnings revisions.
The research firm revised its 2025 earnings per share estimate for UnitedHealth to $18.00, taking a more conservative view due to industry pressures in Medicaid and health insurance exchanges, along with potential investments in selling, general and administrative expenses under CEO Steve Hemsley. Trading at a P/E ratio of 12.6 and maintaining solid revenue growth of 8.06%, the company remains profitable with strong fundamentals. InvestingPro subscribers can access 12 additional key insights about UNH’s financial health and growth prospects.
Wolfe Research analysts believe UnitedHealth is currently generating approximately 1.0% margins in Medicare Advantage, operating above breakeven but below long-term target margins. Their model assumes 4.0% margin on capitated revenue and -1.5% margin on non-capitated revenue in 2025.
The firm identified Optum Health and Medicare Advantage as the business segments facing the greatest earnings pressure in 2025, representing the largest changes to their estimates since UnitedHealth’s original guidance.
UnitedHealth is expected to reissue its 2025 earnings guidance and provide commentary on its 2026 earnings trajectory during its second-quarter earnings report scheduled for July 29.
In other recent news, UnitedHealth Group Inc. has made significant executive changes. Mike Cotton has been appointed as the new head of its Medicaid insurance segment, while Bobby Hunter will expand his role to oversee both Medicaid and Medicare programs. Additionally, Amar Desai has stepped down as CEO of Optum Health, transitioning to a new position within the company. Meanwhile, the Department of Justice is investigating UnitedHealth’s Medicare billing practices, focusing on methods that may have increased Medicare payments. This investigation involves former employees and federal agencies, including the FBI. UBS has lowered its price target for UnitedHealth to $385, citing concerns about margins and a more conservative earnings outlook. The company’s financial guidance, which was previously pulled, is expected to be reinstated during its upcoming earnings release. Moreover, UnitedHealth has pledged to simplify prior authorization processes for medical services, as part of a broader effort to reduce administrative burdens in healthcare.
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