UnitedHealth Sees Growing Chorus of Analysts Cutting Price Target
$UnitedHealth(UNH)$
The average price target on the largest US health insurer fell to $365.13 on Tuesday from $373.42 a day earlier, data compiled by Bloomberg show. That price target has tumbled from $609.23 on April 18, a day after the company reported quarterly earnings that missed analysts' estimates for the first time since at least 2014.
Piper Sandler's Jessica Tassan was among the analysts who recently cut their price target on the stock. Tassan lowered her target to $353 on Tuesday, from $552 previously. Still, she maintained her overweight rating on the stock.
UnitedHealth, has seen its financial results weighed down by persistently high medical care ratio, or the percentage of premium revenues spent on medical claims. In the first quarter that ended March 31, its medical care ratio rose to 84.8%, from 84.3% a year earlier. That compares with 82.2% for its rival $Cigna Group (CI.US)$.
The stock ranked behind $Tesla (TSLA.US)$, $NVIDIA (NVDA.US)$, $Palantir (PLTR.US)$ among those with the biggest trading volume over the past week.
About 10.3 million Americans could lose medical insurance coverage under the tax bill that proposed cuts to federal spending on Medicaid, the Congressional Budget Office said in May. UnitedHealth reported $41.7 billion in revenue from its Medicare & Retirement segment in the first quarter. Total revenue reached $109.6 billion for that period.
Even before the federal funding cuts are enacted, UnitedHealth is already facing other challenges, including potential reduction in the payment rates for Medicare Advantage plans set by Centers for Medicare & Medicaid Services, a federal agency. According to a Wall Street Journal report, the company is also under Department of Justice investigation for possible Medicare fraud, although UnitedHealth stated that it hasn’t been notified by the DOJ of any criminal probe.
"We think CMS's 2025 Medicare Advantage rate cut of 0.16% will pressure margins amid rising MCRs and utilization," CFRA analyst Paige Meyer wrote in a note to clients yesterday, referring to medical care ratio. “We see multiple near-term risks, including the Department of Justice Medicare billing probe, potential Medicaid cuts, and high MCRs throughout 2025.”CFRA has a sell rating on UnitedHealth and a 12-month price target of $216 implying continued downside potential for a stock that has already plunged more than 40% this year to $303.18.
@TigerStars @CaptainTiger @TigerWire @Daily_Discussion @Tiger_chat @Tiger_comments @MillionaireTiger
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
