UnitedHealth Gets Price-Target Cut From BofA After Weak 2025 Outlook, Rising Medical Costs
Synopsis
While BofA sees long-term upside for UnitedHealth, it has applied a lower multiple due to near-term uncertainty around Medicare Advantage and OptumHealth margins.
BofA Securities lowered its price target on UnitedHealth Group (UNH) to $300 from $350, while maintaining a ‘Neutral’ rating, citing limited near-term visibility despite the company's long-term growth potential.
Shares of UnitedHealth fell 7.5% on Tuesday to close at $261.07, but gained 0.6% in after-hours trading, rising to $262.69.
The move follows UnitedHealth’s revised 2025 outlook and weaker-than-expected second-quarter (Q2) results.
UnitedHealth reaffirmed its full-year 2025 outlook on Tuesday after hitting pause earlier this year, but the new numbers didn’t quite land where Wall Street had hoped. The company expects revenue between $445.5 billion and $448 billion and adjusted earnings of at least $16 per share.
The figures represent a significant drop from the $27.66 EPS it reported in 2024 and are well below analysts’ forecasts of $449.07 billion in revenue and $20.90 EPS, according to Fiscal.ai.
UnitedHealth reported a Q2 medical cost ratio of 89.4%, up 430 basis points from the prior year. The company now expects a full-year 2025 medical cost ratio of approximately 89.25%, plus or minus 25 basis points.
Despite the reset, BofA believes the new guidance may serve as a “floor” and expects UnitedHealth to beat the lowered bar.
The firm noted that while management didn’t explicitly reaffirm a long-term EPS growth target of 13%–16%, they “pointed in that direction,” with expectations for earnings to grow again in 2026 and accelerate in 2027 and beyond.
However, BofA is applying a lower valuation multiple to reflect near-term uncertainties, particularly around Medicare Advantage and the normalization of OptumHealth's margin.
On Stocktwits, retail sentiment for UnitedHealth was ‘extremely bullish’ late Tuesday amid a 245% increase in 24-hour message volume.
UnitedHealth’s stock has declined 48.3% so far in 2025.
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