UnitedHealth (UNH) stock has experienced significant turbulence this year. The company withdrew its full-year forecast, announced the CEO’s resignation, and is now facing a criminal investigation by the U.S. Department of Justice (DOJ) regarding potential Medicare fraud. Analysts have responded by issuing downgrades, with the stock having plummeted 40% in 2024.
The DOJ investigation focuses on whether UnitedHealth misrepresented patients’ conditions to secure higher Medicare reimbursements, which could result in severe legal repercussions. Consequently, UNH stock dropped nearly 6% in pre-market trading on Thursday.
Recent events have exacerbated the selloff, with UNH stock declining over 20% in the past five trading days. This followed the unexpected resignation of CEO Andrew Witty, the reinstatement of former CEO Stephen Hemsley, and the suspension of the company’s 2025 financial outlook. These developments came shortly after UnitedHealth reduced its guidance in April, causing the largest two-day stock drop in 27 years.
Raymond James analyst John Ransom downgraded UNH stock from Buy to Hold, citing uncertainty due to the lack of financial guidance for the remainder of the year. He anticipates slower membership growth in 2026 and emphasizes the importance of passing the Medicare Star rating system test in October.
Other analysts have also adjusted their price targets. Deutsche Bank’s George Hill cut his target from $521 to $362 but remains optimistic about the stock. Analysts at Morgan Stanley and Oppenheimer lowered their price targets to $374 and $400, respectively, while Bank of America downgraded the stock from Buy to Hold.
Despite these downgrades, analysts generally remain bullish on UNH stock. According to TipRanks’ consensus, the stock holds a Strong Buy rating based on 21 Buys and four Holds in the last three months. The average price target of $540.68 suggests a 75% upside potential.
— new from TipRanks
