Several Wall Street analysts have increased their price targets for UnitedHealth (UNH) stock ahead of the health insurer’s fiscal third-quarter results, scheduled to be announced on October 28. The revised price targets reflect growing optimism about improvement in the company’s performance. Notably, Mizuho analyst Ann Hynes increased the price target for UNH stock to $430 from $300 and retained a Buy rating. Also, Barclays analyst Andrew Mok raised his price target to $386 from $352 while reiterating a Buy rating.
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After a rough start to the year due to concerns about high medical costs in the Medicare Advantage (MA) business, the Department of Justice (DOJ) probe, and an abrupt CEO departure, UNH stock has recovered more than 7% over the past month. The factors that drove the recent recovery include disclosure of stakes by Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) and other hedge funds, reaffirmation of earnings guidance, and favorable updates on its MA Star ratings.
However, UNH stock is still down 26% year-to-date, as the company’s turnaround is expected to take time.
Analysts Weigh in on UNH Stock Ahead of Q3 Earnings
Hynes adjusted her price targets for companies in the healthcare facility and managed care space, including UnitedHealth, following an analysis of Medicare Advantage Star ratings. The 5-star analyst explained that the target changes reflect increased earnings visibility on major issues and the overall rotation into the healthcare sector.
Meanwhile, Barclays’ Mok increased the price target for UnitedHealth stock as part of his Q3 earnings preview for the health care facilities and managed care group. Mok continues to think that Medicare is the most stable, Medicaid is the most uncertain, and the Affordable Care Act exchanges are improving in terms of fundamentals and from a policy perspective.
Meanwhile, Bernstein analyst Lance Wilkes increased his price target for UNH stock to $433 from $379 and reaffirmed a Buy rating. He expects a sector rebound as Medicare Advantage and Medicaid margins begin to recover following last year’s rate pressure.
Currently, Wall Street expects UNH to report earnings per share (EPS) of $2.81 on revenue of $113.05 billion.
Is UNH Stock a Buy or Sell?
Wall Street is cautiously optimistic about UnitedHealth stock, with a Moderate Buy consensus rating based on 17 Buys, two Holds, and two Sell recommendations. The average UNH stock price target of $340 indicates 9% downside risk from current levels.
