On Thursday, Bernstein, a division of Société Générale Group, adjusted the price target for shares of UnitedHealth Group (NYSE:UNH), a leading healthcare company. The new target is set at $588, a decrease from the previous $643. The firm maintains an Outperform rating on the stock.
The revision in the price target reflects a new target P/E ratio of 18.5x, which is an 8% reduction from the earlier target. This change is attributed to heightened investor uncertainty regarding the outlook for Medicare Advantage (MA) and Change Healthcare (NASDAQ:CHNG) operations.
Despite this decrease, Bernstein's analysts believe that UnitedHealth Group could potentially reach a stock price of over $900 in the next three years, which would equate to an approximate 100% return.
Bernstein's revised earnings per share (EPS) estimates for the year 2025 have been reduced by 3.5%. However, this impact is essentially neutralized by moving the next twelve months (NTM) earnings estimate forward by one quarter. The firm's long-term outlook remains positive, with an anticipated 14.5% EPS growth for UnitedHealth Group from 2025 to 2027.
The analysts expect that the company's target multiple will improve from 0.77 times the market to 1.1 times within three years. This improvement is expected to contribute to the significant potential return for UnitedHealth Group's stock. Despite the current adjustments and market uncertainties, Bernstein's stance on the healthcare giant remains optimistic.
InvestingPro Insights
As UnitedHealth Group (NYSE:UNH) navigates through market uncertainties and investor concerns, real-time data from InvestingPro provides a comprehensive snapshot of the company's financial health. UnitedHealth Group boasts a robust market capitalization of $414.92 billion, underlining its significant presence in the healthcare sector. With a price-to-earnings (P/E) ratio of 18.71 and an adjusted P/E ratio for the last twelve months as of Q4 2023 at 18.54, the company is trading at a value that reflects its earnings power. The revenue growth of 14.64% in the last twelve months signifies a strong top-line performance, which is a critical factor in assessing the company's expansion trajectory.
InvestingPro Tips highlight that management's strategy of aggressive share buybacks is a positive signal of confidence in the company's future prospects. Additionally, UnitedHealth Group's consistent dividend growth, with a 13.94% increase in the last twelve months and a history of raising its dividend for 32 consecutive years, provides investors with a reliable income stream. These aspects are crucial for investors considering the stock's potential amidst the current market volatility.
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