Bank of America Securities has updated its outlook on UnitedHealth Group (NYSE: UNH), maintaining a ‘Neutral’ rating while raising its price target to $325 from $290.
The new target reflects a potential upside of nearly 7% from the current price of $304.
The upward revision follows Warren Buffett’s Berkshire Hathaway’s (NYSE: BRK.A) recent $1.6 billion investment in UnitedHealth, which the firm said reaffirms market confidence in the healthcare giant.
Additionally, stronger peer multiples, now at 17.1x compared to 15.3x previously, support the valuation adjustment. Looking further out, analysts see a potential earnings recovery in 2027, which could unlock additional upside.
BofA cautious on UNH
Despite the higher target, BofA remains cautious. The firm cited limited near-term earnings visibility and emphasized that many investors prioritize annual returns over long-term gains. With key uncertainties still unresolved, the risk of another 12 months of underperformance remains.
In its note, BofA acknowledged UnitedHealth’s long-term promise but stressed the importance of timing.
“The question is less ‘Is there upside?’ and more ‘When will it be realized?’ We are generally favorable on UNH and see the potential for upside in 2027, but until there is more clarity, we maintain a Neutral stance,” BofA said.
It’s worth noting that the company has recently faced leadership changes, suspended financial guidance, and federal probes into its Medicare Advantage billing practices. These challenges contributed to one of the worst stock sell-offs in its history.
Despite the headwinds, UnitedHealth remains the largest Medicare Advantage provider with more than 8 million members, while its Optum unit continues to expand in care and technology services.
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