UnitedHealth Group (UNH) stock has plunged about 42% year-to-date, due to higher costs, primarily in the Medicare Advantage (MA) segment, an abrupt CEO exit, the withdrawal of the full-year guidance, and the Department of Justice’s (DOJ) probe into the company’s Medicare billing practices. Ahead of the upcoming Q2 earnings on July 29, Bernstein called UNH a Top Pick, noting that the pullback in the stock due to the ongoing pressures has created a “very attractive entry point.”
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Wall Street expects UnitedHealth to report earnings per share (EPS) of $4.88 for Q2 2025, reflecting a more than 31% year-over-year decline.
Bernstein Is Bullish on UNH Stock
Bernstein analyst Lance Wilkes expects UNH to benefit from a “hardening” pricing market for government Managed Care Organizations (MCOs) and utilization decelerating back to normal levels. Wilkes lowered his 2025 EPS estimate by 10% to reflect reserve strengthening, cost pressures in Individual and Medicaid businesses, and “clean-up of OptumHealth risk contracts for less engaged physician practices.”
Wilkes expects a doubling of EPS from 2025 to 2029 at a compound annual growth rate (CAGR) of 19%, driven by sector recovery and company-specific margin recovery, while accounting for slower growth rates in UHC MA (UnitedHealthcare Medicare Advantage) and OptumHealth. Further, the analyst stated that COVID-induced Medicare cycles drove margins to trough levels, and he expects normalization to begin in the third quarter in Medicaid and in the first quarter of 2026 in MA.
Wilkes contends that at the current P/E (price-to-earnings) of 13.5x, UNH stock is trading at a “very attractive entry point.” Aside from UNH, the analyst also named Elevance Health (ELV) stock as a Top Pick. However, he noted that while ELV has similar exposures as UNH due to its diversified model, the Medicaid exposure is greater, which increases policy-related uncertainty.
The analyst emphasized that the relative P/Es remain “significantly depressed,” with UNH and ELV stocks down 50% to 60% from pre-COVID levels. He believes that these low valuation levels, which are below the relative P/E levels over the past decade, present a unique opportunity to buy UNH and ELV stocks.
What Is the Price Target for UNH Stock?
Wall Street has a Moderate Buy consensus rating on UnitedHealth stock based on 18 Buys, seven Holds, and one Sell recommendation. The average UNH stock price target of $355.74 indicates 21.6% upside potential.
