Deutsche Bank Analyst Thinks UnitedHealth Group's "Issues Are Manageable"

On May 17, Deutsche Bank analyst George Hill joined ‘Closing Bell Overtime’ on CNBC to discuss the sentiment around UnitedHealth Group Incorporated (NYSE:UNH), despite the stock heading for its worst month ever.

Hill explained that the company's core business remains well-managed, while acknowledging a challenging two-year period for UnitedHealth's Medicare Advantage business, both in its provider and insurance segments. According to Hill, these headwinds are primarily due to lower government payments to insurers and increased healthcare utilization following the COVID-19 pandemic. However, he believes that the company will eventually move past these headwinds. Hill said:

"This would seem to be an unusual time where the stock is trading at a valuation... You don't often get the chance to buy United shares at 13 or 14 times earnings, given where the stock is historically trading. Simply speaking, we don't think the business is broken. We think these issues are manageable."

Hill also pointed to a 5% increase in government Medicare Advantage payment rates for 2026 after years of flat rates amid rising utilization. He noted that the full impact of government changes to the risk adjustment model, which began in 2024, will be realized by 2026. UnitedHealth Group Incorporated (NYSE:UNH) is also expected to lap the recent increases in utilization and medical cost inflation by 2027. Hill anticipates positive guidance for 2026 at the company's Q4 analyst and investor day later this year, with Q1 2026 results beginning to show improvement.

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Disclosure: None. This article is originally published at Insider Monkey.