UnitedHealth CEO change ‘latest in a string of setbacks,’ says Morgan Stanley

After UnitedHealth (UNH) announced that Sir Andrew Witty would be stepping down from the CEO role for personal reasons and will immediately be replaced by Stephen Hemsley and also took the opportunity to suspend FY25 guidance as care activity has continued to accelerate, Morgan Stanley analyst Erin Wright called the news “the latest in a string of setbacks for the company.” The focus for investors will be on the continuing elevated cost trends, above and beyond its expectations, which is “a dynamic that will inevitably weigh on its shares today,” adds the analyst. The company saying it is seeing cost trends increase in areas beyond Group MA, stating that “care activity continued to accelerate while also broadening to more types of benefit offerings than seen in the first quarter,” may weigh on the peer group’s shares today as investors wait to hear from peers on if a broader increase in trend is more than a company specific issue for UnitedHealth, the firm says. Morgan Stanley has an Overweight rating and $563 price target on UnitedHealth shares, which are down $33.20, or 9%, to $345.55 in pre-market trading.