UnitedHealth (UNH) is making big changes after a recent financial miss hurt investor confidence. In May, Stephen Hemsley stepped in as CEO by replacing Andrew Witty, after the insurance company reported its first earnings miss since 2008 and suspended its full-year forecast. At the annual shareholder meeting, Hemsley apologized and promised to win back trust by improving how the company handles rising healthcare costs, especially in its Medicare Advantage plans for seniors and people with disabilities. He also said that the company will review its entire business, including its pharmacy benefit unit Optum Rx and its insurer UnitedHealthcare.
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The trouble began earlier this year. In February, then-CEO Andrew Witty told executives things were going well, according to The Wall Street Journal, but just two months later, the company faced major financial problems. Witty, who did not have a lot of experience in U.S. insurance, was replaced by Hemsley to help fix the situation. Now, the company plans to adjust its private insurance and Medicare pricing to better reflect rising care costs and avoid similar surprises. Despite the issues, some analysts still see potential in the stock.
KeyBanc’s Matthew Gillmor lowered his price target on UnitedHealth from $450 to $400 but kept a Buy rating since he thinks the market may be pricing in too much negativity. Indeed, he believes the company’s earnings could bounce back starting in 2026. Separately, Barclays’ Andrew Mok also lowered his target to $350 but kept a Buy rating despite warning that Medicare Part D and Affordable Care Act plans could continue to weigh on profits in 2025 while creating more disruption in 2026. As a result, Barclays said that investors may react strongly to any changes in earnings and that hospital stocks might be safer than managed care, for now.
What Is the Future of UNH Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on UNH stock based on 19 Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average UNH price target of $380.59 per share implies 25.7% upside potential.
