In This Article:
UnitedHealth (NYSE:UNH) shares dropped nearly 5% Wednesday after a new investigative report and an analyst downgrade weighed on sentiment.
The Guardian published an investigation alleging the healthcare giant secretly rewarded nursing homes for avoiding hospitalizations. According to internal documents and whistleblower reports, UnitedHealth used programs like Premium Dividend and Quality and Shared Risk to offer bonuses based on metrics like admits per thousand. Some facilities allegedly delayed necessary hospital transfers for serious conditions, and staff reportedly faced pressure to suggest do not resuscitate orders to patients.
The news added to an already heavy few weeks for the company. UnitedHealth has faced the resignation of CEO Andrew Witty, pulled its 2025 forecast, and is under a U.S. Department of Justice investigation over Medicare billing. Shares had recently bounced back 18% from their lows, boosted by insider buying and investor hopes that the worst had passed.
That optimism took another hit as HSBC downgraded the stock to Reduce from Hold, slashing its price target from $490 to $270. Analyst Sidharth Sahoo flagged concerns about rising medical loss ratios, drug pricing policy risk, and weaker return on equity outlook.
Following the sluggishness that saw UnitedHealth (NYSE:UNH) slide from near $600 in early April to a trough around $280, shares have clawed back to roughly $320 as of late May. Analysts' 12-month consensus target stands at $394.80about 22.8% above current levelshighlighting optimism around ongoing membership growth and margin stabilization.
The bull case stretches to $677, while the bear scenario pins a low of $270, reflecting sharply contrasting views on reimbursement pressures and cost trends. This wide band underscores investor debate over whether UNH's scale and diversified services can offset near-term headwinds
This article first appeared on GuruFocus.