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Bank of America cuts UnitedHealth Group (NYSE:UNH) to Neutral, trimming its price target to $350 from $560 as it forecasts a 10%20% reduction in the insurer's withdrawn 2025 outlook.
UNH shares plunged about 18% after CEO Andrew Witty's sudden exit and the guidance pull, driven by higher-than-expected medical utilization. Analyst Joanna Gajuk says the guide withdrawal reflects uncertainty around utilization trends and gives incoming CEO Stephen Hemsley time to set refreshed targets.
Gajuk also flags UNH's plan to restore EPS growth and 3%5% Medicare Advantage margins could pressure MA membership, potentially leading to flat or negative enrollment as the company refines its bidding strategy. She views these headwinds as largely company-specificstructural issues within UNH rather than a broad managed-care malaiseunderscored by the abrupt leadership change.
Why It Matters: With UNHthe sector's bellwetherrevising guidance and leadership, investors must distinguish between idiosyncratic challenges at UnitedHealth and broader managed-care risks when positioning for 2025.
Investors will be watching UNH's updated outlook and Hemsley's strategic roadmap in the coming weeks to gauge whether the insurer can stabilize utilization trends and membership growth.
This article first appeared on GuruFocus.