HSBC Downgraded UnitedHealth (UNH) to Reduce Amid Leadership Change

On Wednesday, HSBC downgraded its rating of UnitedHealth Group Inc. (NYSE:UNH) to Reduce from Hold and cut its price target by ~45% to $270. This comes after the company announced a leadership change and withdrew its 2025 financial guidance earlier in May. UnitedHealth shares were down more than 1% in premarket US trading on Wednesday, extending a year-to-date slump to 40%.

UnitedHealth cited a larger-than-anticipated spike in medical costs, particularly from new beneficiaries in government-backed Medicare Advantage plans, as the reason for suspending its full-year financial forecast. Care activity has reportedly accelerated and broadened to more types of benefit offerings than seen in the quarter ended March 31, 2025. On May 13 CEO Andrew Witty stepped down for personal reasons and was replaced by Stephen Hemsley, who previously served as CEO from 2006 to 2017 and will continue as Chairman. Witty will serve as a senior adviser to Hemsley.

HSBC analysts, led by Sidharth Sahoo, believe that the increased downside risk on 2025 estimated adjusted EPS provides a 'kitchen sinking opportunity' for the new CEO and foresee a delayed recovery for the company. Despite these challenges, UnitedHealth expects to return to growth in 2026 and projects high single-digit EPS growth in fiscal year 2027.

UnitedHealth Group Inc. (NYSE:UNH) is a global healthcare company that operates through 4 segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx.

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