Wolfe Research analyst Justin Lake has lowered his price target for UnitedHealth Group (UNH) to $330 from $363, while still maintaining a Buy rating. This change comes as the Top analyst expects the company’s 2025 earnings to remain under pressure.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
Lake now expects 2025 earnings per share (EPS) to land at $18.00, down from earlier estimates. This revision reflects headwinds in Medicaid and health insurance exchanges (HIX). Also, potential increases in selling, general, and administrative (SG&A) expenses are expected as CEO Steve Hemsley makes efforts to put the company back on track.
Segment-Wise Breakdown
The analyst estimates UNH’s Medicare Advantage segment is currently operating at about 1% margin, which is above breakeven but still below the company’s long-term margin targets. Lake’s financial model for 2025 also projects a 4% margin on capitated revenue and a negative 1.5% margin on non-capitated revenue.
Also, the Top analyst highlighted Optum Health and Medicare Advantage as the business segments likely to witness the most earnings pressure in 2025.
Lake expects the company to reissue 2025 guidance and provide insights on the earnings path in 2026 during the Q2 results on July 29. The analyst’s 2026 EPS estimate stands at $22, implying a 15x multiple for the updated price target.
UNH’s Struggles Continue
The lowered price target comes at a time when UnitedHealth is facing financial, legal, and operational headwinds. The company’s stock has plunged about 40% so far in 2025 due to the withdrawal of its earnings outlook and its first quarterly earnings miss since 2008.
Further, an investigation into Medicare billing practices by the Justice Department has raised compliance concerns. At the same time, shareholder lawsuits accuse leadership of misleading investors.
Is UNH a Good Buy Right Now?
Turning to Wall Street, UNH stock has a Moderate Buy consensus rating based on 18 Buys, eight Holds, and one Sell assigned in the last three months. At $360.04, the average UnitedHealth stock price target implies a 19.1% upside potential.
