On Wednesday, Piper Sandler adjusted its outlook on UnitedHealth Group (NYSE:NYSE:UNH) shares, increasing the price target to $571 from the previous $566 while maintaining an Overweight rating. The adjustment reflects a positive perspective on the company's performance moving into the 2024 calendar year.
The firm highlighted that UnitedHealth is poised for a restrained growth trajectory following a challenging 2023. The health care conglomerate is expected to benefit from a balanced benefit design, deliberate care delivery, and documentation processes, along with an attractive mix of business segments.
Piper Sandler pointed to a miss in the medical loss ratio (MLR) headline, attributing it to the entity Change, but emphasized that the underlying medical costs for UnitedHealth were consistent with forecasts and well-managed. The firm's confidence in the company's cost control measures played a significant role in maintaining the Overweight rating.
The new price target is based on a steady 19 times multiple of the higher projected earnings per share (EPS) for the 2025 calendar year. This valuation suggests that Piper Sandler expects UnitedHealth's financial performance to strengthen in the forthcoming period.
UnitedHealth Group's stock adjustment reflects the market's optimism about the company's strategic approach to growth and cost management, as well as its ability to navigate through post-pandemic challenges in the healthcare sector.
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