Wolfe Research Sees Margin Recovery As Key Catalyst for Unitedhealth (UNH)

Despite the company’s recent setbacks, Wolfe Research analyst Justin Lake reiterated his bullish view on UnitedHealth Group Inc. (NYSE:UNH). While maintaining his Outperform rating, he lowered his price target to $390 from $501, driven by downward revisions of his earnings estimates as the company withdrew guidance. The analyst believes that a potential improvement in OptumCare’s physician capitation business margin can substantially support earnings and overall growth. As per him, the stabilization and better performance at Optum Health will remain a key catalyst for share prices. He also hopes for a margin improvement in the Medicare Advantage business, which should improve overall financial stability.

A successful healthcare provider smiling confidently in a modern hospital facility.

The company has recently been reeling under several headwinds, including the abrupt resignation of the CEO and withdrawal of guidance. These issues were further exacerbated by The Guardian‘s May 21 investigative article, which alleged that the company secretly paid nursing homes to reduce hospitalizations and thus saved millions in costs. However, the company has categorically denied these allegations. According to them, the U.S. Department of Justice already conducted multi-year investigations and finally declined to pursue the matter.

UnitedHealth Group Inc. (NYSE:UNH) is one of the largest health care companies in the world. It provides health insurance and healthcare solutions in the U.S. and globally under the UnitedHealthcare and Optum brands.

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