On Friday, KeyBanc Capital Markets reiterated its Overweight rating on UnitedHealth Group shares (NYSE:UNH), maintaining a price target of $650. The firm's analyst, Matthew Gillmor, provided insights into the company's third-quarter results, which he described as "noisy but not thesis altering."
With a market capitalization of $470 billion and an overall "GREAT" financial health score according to InvestingPro, UNH maintains its position as a prominent player in the Healthcare Providers & Services industry. Gillmor pointed out that the medical loss ratio (MLR) was higher due to non-recurring revenue dynamics, yet the underlying cost trends remained stable. He noted that hospital coding and specialty drugs continued to impact costs.
Gillmor highlighted the positive results from the Medicare Advantage Annual Enrollment Period (AEP), emphasizing the strong member retention and mix which may lead to incremental benefits to the company's margins. He suggested that these factors support the narrative of earnings per share (EPS) acceleration for UnitedHealth Group, potentially bolstered by an improving Medicare Advantage rate environment anticipated under the incoming Trump administration.
The company's solid performance is reflected in its 7.7% revenue growth over the last twelve months, while maintaining a 32-year streak of consistent dividend payments with an attractive 1.65% yield.
The analyst expressed confidence that UnitedHealth can achieve an acceleration in EPS growth back toward 13-16% in the 2026 timeframe. This growth trajectory, according to Gillmor, could lead to a re-rating of the company's multiple toward historical averages of around 19 times, compared to the current 17 times.
InvestingPro analysis suggests UNH is currently undervalued, with analysts setting price targets ranging from $587 to $700. Discover 8 more exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
UnitedHealth Group's performance in the Medicare Advantage sector appears to be a key driver for the optimistic outlook provided by KeyBanc. With the expectation of favorable conditions under the new administration and strong fundamentals, the firm maintains a bullish stance on the healthcare giant's stock.
In other recent news, UnitedHealth Group reported its fourth-quarter earnings, showing an adjusted earnings per share (EPS) of $6.81, slightly surpassing consensus estimates by 1%, with revenue matching expectations at $100.8 billion.
Bernstein analysts maintained their positive stance on UnitedHealth, reiterating an Outperform rating. Meanwhile, Piper Sandler reaffirmed its Overweight rating on the company, highlighting its consistent track record of double-digit adjusted EPS growth and strong execution.
UnitedHealth Group and Amedisys (NASDAQ:AMED) have extended their merger deadline amid scrutiny from the U.S. Department of Justice. The proposed $3.3 billion merger would expand UnitedHealth's presence in the home health sector.
The Federal Trade Commission (FTC) has released a report revealing significant price markups on specialty generic drugs by the three largest pharmacy benefit managers (PBMs), including OptumRx, owned by United Health.
In relation to Medicare Advantage plans, a government proposal could lead to increased payments for such plans in 2026, potentially benefiting companies like UnitedHealth. These are the recent developments for UnitedHealth Group.
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