UnitedHealth Group Downgraded by Baird, Price Target Slashed to $198

Baird analyst Michael Ha downgraded UNH from "Neutral" to "Underperform" and slashed the price target from $312 to $198, indicating a 36.54% reduction in expected stock value. The average 1-year price target for UNH is $341.71, with a high estimate of $677 and a low estimate of $198. The average brokerage recommendation is 2.3, indicating "Outperform" status.

Baird analyst Michael Ha downgraded UnitedHealth Group Inc. (UNH) from "Neutral" to "Underperform" and slashed the price target from $312 to $198, indicating a 36.54% reduction in expected stock value. The average 1-year price target for UNH is $341.71, with a high estimate of $677 and a low estimate of $198. The average brokerage recommendation is 2.3, indicating "Outperform" status.

The downgrade follows ongoing concerns around the company’s Optum Health segment and broader headwinds across nearly all of UnitedHealth's business lines. According to Ha, the long-term profitability of Optum Health's value-based care model is in doubt, with long-term value-based care margins reduced to 5% and an implied headwind of nearly 20% over three years under CMS's v28 changes to risk adjustment [1]. Without meaningful offsets or mitigation strategies, and with re-coding back to pre-v28 levels considered unrealistic, Ha has little confidence in UnitedHealth's ability to maintain even 1% value-based care margins by 2026.

The company's second-quarter earnings report earlier this week intensified concerns. While revenue slightly beat expectations, earnings missed, and the full-year forecast came in well below Wall Street estimates. The result triggered a sell-off that has extended through the week. Shares are now down roughly 51% over the past six months and 47% year-to-date, drastically underperforming the broader market, which is up more than 5% and 8% over the same periods, respectively [2].

Baird also flagged new concerns across UnitedHealth's other business units, including Medicare Advantage, Community Group/HIX, Medicaid, and Optum Insight. Even segments that were previously seen as margin drivers, like OptumInsight and OptumRx, are now viewed as facing greater operational challenges heading into 2026.

Despite the downgrade, broader sentiment among analysts remains largely positive. According to LSEG data, 19 out of 28 analysts covering the stock still rate it as a buy or strong buy. The average price target sits at approximately $346, suggesting more than 30% upside from current levels. However, Thursday's steep drop signals investors are reacting more strongly to Baird's lowered expectations and growing skepticism about the company's ability to stabilize margins and earnings over the next year.

UNH Price Action: UnitedHealth shares were down 6.54% at $248.66 at the time of writing, according to Benzinga Pro.

References:
[1] https://www.cnbc.com/2025/07/31/baird-downgrades-unitedhealth-shares-cites-concerns-over-optum-health-business.html
[2] https://www.benzinga.com/trading-ideas/movers/25/07/46773050/unitedhealth-shares-slide-over-5-after-baird-downgrade-and-price-target-cut