Bernstein Calls UnitedHealth Stock a Top Pick Ahead of Q2 Earnings Amid Attractive Entry Point

Bernstein analyst Lance Wilkes has called UnitedHealth Group (UNH) a Top Pick ahead of Q2 earnings, despite the stock's 42% year-to-date decline due to higher costs, CEO exit, and DOJ probe. Wilkes expects a "hardening" pricing market for government MCOs and utilization deceleration, leading to a doubling of EPS from 2025 to 2029 at a 19% CAGR. The analyst sees a "very attractive entry point" at the current P/E of 13.5x. Wall Street has a Moderate Buy consensus rating and an average price target of $355.74, indicating 21.6% upside potential.

UnitedHealth Group (UNH), a stalwart of the healthcare sector, is set to unveil its second-quarter earnings on July 29. The company has faced significant challenges in recent months, including a nearly 45% year-to-date decline in its stock price, heightened medical care ratios, and a suspended full-year guidance. Despite these headwinds, Bernstein analyst Lance Wilkes has called UNH a Top Pick ahead of the earnings release, citing a potential "hardening" pricing market for government MCOs and utilization deceleration [1].

Wilkes expects a doubling of earnings per share (EPS) from 2025 to 2029 at a 19% compound annual growth rate (CAGR). He sees a "very attractive entry point" at the current price-to-earnings (P/E) ratio of 13.5x. Wall Street analysts have a Moderate Buy consensus rating, with an average price target of $355.74, indicating a 21.6% upside potential [2].

UnitedHealth Group has reported mixed financials in its recent quarters. The company's first-quarter revenues of $109.6 billion showed modest growth, driven by its ability to serve more people across its UnitedHealthcare and Optum businesses. However, rising medical care ratios and the suspension of full-year guidance have left investors on edge [3].

The company's decision to suspend its 2025 outlook, citing higher-than-anticipated medical expenditures, has added to the market's caution. Nevertheless, management expects to return to growth in 2026, setting the stage for a potential rebound. For the current quarter ending June 2025, the consensus earnings estimate stands at $5.08 per share, down sharply from $6.80 in the same period last year [3].

Analysts are also keeping a close eye on the company's operational focus, with plans to exit its Latin American operations through the sale of Banmedica for approximately $1 billion in 2025. This move aims to cut costs and strengthen the company's financial position, allowing more resources to be directed toward core U.S. markets and strategic growth initiatives [3].

The departure of CEO Andrew Witty and the return of Stephen Hemsley as interim CEO signal a pivot to stability. Hemsley's prior tenure (2007–2017) coincided with UNH's rise to industry dominance, and his reengagement aims to restore cost controls and Optum's performance [2].

UnitedHealth's upcoming Q2 report is a critical moment for the company. After a challenging year, the pressure is on for management to deliver updates that point to a credible turnaround. Despite the market's skepticism, analysts remain upbeat about the company's long-term fundamentals and its ability to execute through the cycle [1, 2, 3].

References

[1] https://finance.yahoo.com/news/dear-unitedhealth-stock-fans-mark-121502654.html
[2] https://www.ainvest.com/news/unitedhealth-group-unh-balancing-regulatory-headwinds-turnaround-play-2507/
[3] https://www.quiverquant.com/news/category/breaking