The news flow around UnitedHealth (NYSE:UNH) stock isn’t getting any better. Just a day after announcing the departure of CEO Andrew Witty and suspending its full-year guidance, a Wall Street Journal report revealed that the Department of Justice is investigating the healthcare giant for possible Medicare fraud.
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The WSJ noted that the DOJ’s healthcare-fraud unit is leading the inquiry, a division focuses on offenses like kickbacks that result in inflated Medicare and Medicaid payments.
As shares took yet another hit in Thursday’s session, down ~18%, J.P. Morgan analyst Lisa Gill weighed in. While many details remain under wraps, Gill pointed to a key development from earlier this year: a March report by a Special Master in the long-running DOJ case United States ex rel. Poehling v. UnitedHealth Group, Inc.
That report concluded the government had not proven that UnitedHealth knowingly held onto roughly 1.97 million unsupported diagnosis codes – meaning the company did not violate the False Claims Act. Crucially, the DOJ hadn’t reviewed patient medical records to verify whether those codes were truly improper, highlighting just how difficult it is to prove wrongdoing in Medicare Advantage coding by managed care organizations.
“We are not lawyers, and while this is independent from the reporting done by the Wall Street Journal, we think that it bears remembering as we receive new information,” Gill said on the matter.
Separately, following the leadership change at UNH and the suspension of its 2025 guidance, Gill has revised several estimates. For 2025, her adjusted EPS forecast drops from $26.18 to $22.26, based on an estimated medical loss ratio (MLR) of 88.6%, reflecting increased care activity that has worsened over the past month. For 2026, the analyst now projects around 10% year-over-year adjusted EPS growth, with her estimate landing at $24.58 (down from $29.15), as she anticipates progress in addressing the aforementioned challenges and expects UnitedHealthcare to steer its Medicare Advantage business back toward target margins. Gill believes this will be achieved by prioritizing profitability over growth in the 2026 plan bids.
“We believe UNH has the ability to work on some of the factors that have driven the downward revision, particularly in OptumHealth over the course of 2025/2026, and with the better-than-anticipated MA 2026 rates and continued improvement in Medicaid rates, we believe there is still a path to +LDD% adj. EPS growth (with an upside skew if UNH makes faster progress on its improvement initiatives),” the analyst went on to add.
All told, Gill remains on UNH’s side, keeping an Overweight (i.e., Buy) rating on the shares, although her price target goes from $525 to $405. Still, there’s a potential upside of 61% from current levels. (To watch Gill’s track record, click here)
Most of Gill’s colleagues take a similar stance; based on 21 Buys vs. 4 Holds, the analyst consensus rates the stock a Strong Buy. At $540.68, the average price target offers a one-year upside of 115%. (See UNH stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.