Shares of UnitedHealth Group (NYSE:UNH) came under heavy selling pressure after the healthcare giant unexpectedly scrapped its 2025 earnings forecast and announced a major leadership shakeup — developments that triggered swift downgrades from Bank of America and Raymond James.
Raymond James lowered its rating on the stock to Market Perform, pointing to a troubling combination of CEO turnover and the sudden removal of financial guidance, which came just a month after the company had already slashed its forecast by 12%. CEO Andrew Witty is stepping down, with former CEO Stephen Hemsley returning to lead the company.
The revised outlook — or lack thereof — stems from worsening cost trends in UnitedHealth’s Medicare Advantage (MA) segment. Bank of America, which downgraded the stock to Neutral from Buy, said cost pressures are not only escalating but also spreading to more complex patient groups, such as dual-eligible enrollees. As a result, the firm slashed its price target on UNH to $350 from $560, citing reduced earnings expectations and a lower valuation multiple.
Raymond James echoed these concerns, trimming its 2025 earnings per share estimate from $26.25 to $22, and flagged the remainder of the year as highly uncertain. Analysts noted that UnitedHealth will need to meet key quality benchmarks, such as the Medicare Stars ratings in October, to avoid further setbacks. Both firms see little potential for meaningful membership growth in 2026, as the company prioritizes margin recovery.
UnitedHealth shares plunged 18% following the announcement and have now fallen 38% since the start of the year. Both Bank of America and Raymond James pointed to a significant compression in the stock’s valuation — with UNH now trading at roughly 14 times earnings, compared to its historical average of 19x.
“In short, it will be a while before the smoke clears,” Raymond James concluded.