UnitedHealth (UNH) stock has had a rough ride this year, and the pain isn’t over yet. The company withdrew its full-year forecast and revealed its CEO is stepping down. Now, despite the stock plunging 40% in 2024, analysts are starting to issue downgrades.
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Making things worse, the U.S. Department of Justice has launched a criminal investigation into Medicare fraud. The probe will check whether UnitedHealth made patients seem sicker than they were to get more money from Medicare. This move could be considered fraud and come with serious legal consequences. As a result, UNH stock is trading down by almost 6% in pre-market trading on Thursday.
What’s Happening with UNH Stock
UNH share selloff has intensified recently, with UNH stock sinking more than 20% in the past five trading days. The sharp decline followed the surprise resignation of CEO Andrew Witty, the quick return of former CEO Stephen Hemsley, and the suspension of the company’s 2025 financial outlook.
This shake-up came less than a month after UnitedHealth had slashed its guidance in April, triggering the biggest two-day drop in its stock in 27 years.
Top Analyst Downgrades UNH Stock to Hold
Raymond James’ top-rated analyst John Ransom downgraded his rating on UNH stock from Buy to Hold. He stated that even though the CEO change was expected, the company pulling its financial outlook was a surprise. Ransom advises caution due to unclear earnings for the rest of the year since there’s no guidance. He also expects slower membership growth in 2026. Overall, Ransom believes ‘it will be awhile until the smoke clears’.
Additionally, Ransom pointed out that the company must pass the “Stars test” in October, meaning about 70% of its members need to be in 4-star plans. Notably, the test is the Medicare Star rating system run by the Centers for Medicare and Medicaid Services (CMS). It rates how good Medicare Advantage plans are. Only plans with four stars or higher can get big bonus payments from the government.
Other Analysts Cut Price Targets on UNH Stock
Deutsche Bank’s George Hill stated that he didn’t panic and sell after one of the worst days in the stock’s history, only to face another big drop and lowered forecast a month later. Even so, Hill cut his price target for the stock from $521 to $362 but still thinks it’s a good buy.
Likewise, analysts at Morgan Stanley and Oppenheimer lowered their UNH price targets to $374 and $400, respectively. Meanwhile, Bank of America analysts downgraded the stock from Buy to Hold.
Is UNH a Good Buy Right Now?
Despite the downgrades, analysts remain mostly bullish on UNH stock. According to TipRanks’ consensus, UNH stock has a Strong Buy consensus rating based on 21 Buys and four Holds assigned in the last three months. At $540.68, the average UnitedHealth stock price target implies a 75% upside potential.
