UnitedHealth (UNH) shares are still a top pick for 2025, analysts at Bernstein said after the company reported lower-than-expected revenues in its latest earnings update.
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Fiscal fourth quarter revenues missed Wall Street estimates due to weakness in its health insurance business, while the company also reported higher-than-expected annual medical costs.
Revenue from premiums was $76.48 billion for the quarter ended December 31st, compared with estimates of around $78 billion. The company’s annual medical cost ratio — the percentage of premiums spent on medical care — rose to 85.5% from 83.2% in 2023.
Analysts Remain Bullish on UNH
But analysts remain upbeat despite the revenue miss, with a slew of research notes issued in the wake of the earnings reiterating Buy ratings on the stock
Among these, Bernstein maintains that UNH remains a top pick for 2025 following the company’s Q4 report.
According to Bernstein, the company’s 2025 outlook is achievable and Medicare Advantage trends are improving. Additionally, the stock’s valuation remains attractive, the firm said as it stuck to its Buy rating on the stock and a price target of $697
UNH Faces Questions Over Medical Costs
Despite the bullish commentary, UNH still faces potential headwinds from rising medical costs. The results last week were the first since the killing of UNH CEO Brian Thompson, which sparked a debate over access to U.S. health insurance.
Earlier this month a group of shareholders demanded a review of the costs and public impact of the company’s policy of limiting or delaying access to healthcare in the wake of his murder in Manhattan in December.
Is UNH a Good Stock to Buy?
Overall, Wall Street has a Strong Buy rating on the stock, based on 18 Buys and no Hold or Sell. The average UNH price target of $650.29 implies about 27% upside potential from current levels. Shares of UNH have declined 10% in the last three months.
