UnitedHealth (UNH) stock fell about 7% on Thursday, hitting a new 52-week low after Robert W. Baird analyst Michael Ha downgraded the rating to Sell from Hold. The analyst also slashed the price target for UNH stock to $198 from $312, suggesting a potential 20% downside.
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This move follows the company’s weak Q2 results and growing concerns about the company’s OptumHealth segment, particularly its value-based care (VBC) business.
It must be noted that the stock has already plummeted 51% in the last six months. Key reasons for UnitedHealth stock’s decline are concerns about rising costs in its Medicare Advantage business, a surprise CEO exit, and a federal probe into its billing practices.
Here’s Why Baird Analyst Turned Bearish on UNH Stock
The analyst noted, “While we do appreciate all the additional management commentary, we left the 2Q earnings call viewing the fundamental story as more challenged than expected.”
He specifically pointed to OptumHealth, UnitedHealth’s health-services arm, as a key area of concern. He pointed out that UNH lowered its long-term VBC margin outlook to just 5%. Ha believes the VBC business could struggle to maintain even a 1% margin due to a recent regulatory change known as v28.
The analyst said that besides OptumHealth, other segments such as Medicare Advantage, Medicaid, and Optum Insight seem under more pressure than expected. Ha now sees a tougher business environment for the company overall through 2026.
Is UNH a Good Buy Right Now?
Turning to Wall Street, UNH stock has a Moderate Buy consensus rating based on 18 Buys, three Holds, and two Sells assigned in the last three months. At $324.29, the average UnitedHealth stock price target implies a 30.7% upside potential.
