On Wednesday, Piper Sandler reaffirmed its positive stance on UnitedHealth Group (NYSE:NYSE:UNH), maintaining an Overweight rating with a $600.00 price target. The firm's analyst, Jessica Tassan, provided insights into the health care sector, highlighting UnitedHealth, a $500 billion market cap healthcare giant with a "GREAT" financial health score according to InvestingPro, as a top pick among diversified managed care organizations.
Tassan emphasized the company's consistent track record of double-digit adjusted earnings per share (EPS) growth and its ability to yield over 20% annual return on equity (ROE) despite regulatory and rate challenges. The company has demonstrated strong execution with 9.4% revenue growth in the last twelve months and has maintained dividend payments for 32 consecutive years, raising them for 15 straight years.
According to the analyst, UnitedHealth's success is rooted in its expansive network and product offerings, which facilitate broad access to care and improved clinical outcomes through integrated services, technology, and patient engagement.Want deeper insights? InvestingPro subscribers have access to over 30 additional premium insights and metrics for UNH, including detailed valuation analysis and growth forecasts.
The analyst pointed out that UnitedHealth's vertical integration and complementary businesses enable it to achieve efficiencies and sustain earnings, even in tough market conditions. The expectation is that the company will continue to invest in its operations and stakeholders, with a favorable operating environment leading to increased investment.
Tassan's price target of $600 is derived from applying an 18.2x multiple to the company's projected adjusted EPS for the calendar year 2026, suggesting an approximate 11% upside from the stock's closing price on Monday. Currently trading at a P/E ratio of 34.9x, the broader analyst consensus is even more optimistic, suggesting a potential 19% upside.
The analyst believes that UnitedHealth's innovative leadership in the industry warrants a valuation in line with its five-year average and a premium relative to its peers.Access the comprehensive UNH Pro Research Report and discover what really matters about this healthcare leader through intuitive visuals and expert analysis on InvestingPro.
In other recent news, the Federal Trade Commission (FTC) has released a report revealing significant price markups on specialty generic drugs by the three largest pharmacy benefit managers (PBMs), Caremark Rx, Express Scripts (NASDAQ:ESRX), and OptumRx. These PBMs, owned by CVS, Cigna (NYSE:CI), and United Health respectively, have generated over $7.3 billion in revenue from dispensing drugs from 2017 to 2022.
Meanwhile, UnitedHealth Group and Amedisys (NASDAQ:AMED) have extended their merger deadline amid scrutiny from the U.S. Department of Justice. If completed, the $3.3 billion merger would expand UnitedHealth's presence in the home health sector. This development follows a government proposal that could lead to increased payments for Medicare Advantage plans in 2026, a potential boon for companies like UnitedHealth and CVS Health Corp (NYSE:CVS).
On the analyst front, KeyBanc Capital Markets has upgraded the stock rating of Acadia Healthcare (NASDAQ:ACHC) Company, Inc. to Overweight, signaling a positive shift in perspective. Furthermore, Piper Sandler has reaffirmed its Overweight rating on UnitedHealth Group shares, despite a minor price target revision.
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