Wall Street analysts have issued a bearish outlook for UnitedHealth (NYSE: UNH) stock following a tumultuous week that saw the healthcare giant’s shares plummet 23%.
Notably, the stock rebounded slightly after a flurry of high-profile insider buying signaled confidence. In pre-market trading on Monday, the stock rose 4% to $305.25, following a 6% gain in the previous session, which closed at $291.91.
The sharp decline was triggered by a series of setbacks, starting with the sudden resignation of CEO Andrew Witty on May 13, who cited personal reasons, a move that rattled investors.
Days later, UnitedHealth suspended its 2025 outlook, citing surging medical costs in its Medicare Advantage (MA) segment and higher-than-expected care activity.
Former CEO Stephen Hemsley stepped in to replace Witty, acknowledging the company’s disappointing recent performance but expressing optimism about its long-term growth potential.
Further pressure came from a May 15 Wall Street Journal report revealing that the Department of Justice (DOJ) is launching a criminal investigation into UnitedHealth’s MA billing practices. The company, which denied receiving formal notice of the probe, called the report “deeply irresponsible.”
Analysts revise UNH stock price
Truist Securities analyst David MacDonald lowered his UNH stock price target from $580 to $360, a 37.9% cut, while maintaining a ‘Buy’ rating. In an investor note on May 19, the firm cited the suspended 2025 guidance, leadership transition, and higher-than-expected MA utilization as key concerns, alongside broader trends affecting complex patient populations.
Truist also revised its 2025 and 2026 EPS forecasts to $21.72 (from $26.20) and $24.78 (from $29.32). Despite the challenges, the firm remains cautiously positive, emphasizing UnitedHealth’s long-term earnings power to support the ‘Buy’ thesis.
Meanwhile, on the same date, TD Cowen downgraded UnitedHealth shares from Buy to Hold, slashing its price target from $520 to $308, a 40.8% reduction.
Analyst Ryan Langston highlighted that v28 coding rules are impacting UNH more than peers like Humana, with historical coding advantages eroding and regulatory pressures increasing due to phased-in Risk Adjustment Factor (RAF) model changes.
TD Cowen also noted UnitedHealth’s struggles to recapture target margins in its UnitedHealthcare and Optum Health segments, compounded by the DOJ investigation and ongoing operational cost inefficiencies.
The firm expressed skepticism about UNH’s coding advantage, suggesting it may be fundamentally impaired, further adding to the cautious sentiment.
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