By Mackenzie Tatananni

While UnitedHealth Group is having a terrible year -- there's no way to sugarcoat it -- the insurer does have some fans.

Shares have cratered 49% since the close on April 16, before the company reported its latest financial results. Both earnings and revenue fell short of expectations and management slashed its full-year financial guidance.

The stock's performance hasn't been much better over the longer term: UnitedHealth has lost 41% this year and 45% over the past 12 months amid rising medical costs and a string of disappointing earnings reports.

However, the insurer still has some cheerleaders heading into its second-quarter earnings report, which is slated for July 29.

In a research note Tuesday, Leerink Partners analysts led by Whit Mayo reiterated an Outperform rating on the stock, even as they trimmed their price target to $340 from $355 to reflect changes to their forecasts of UnitedHealth's financial results. Earnings for the second quarter are slated to be disclosed on July 29.

Leerink's financial model points to 2025 earnings of $18.20 a share, down from an earlier $23.15. The consensus call among analysts polled by FactSet is for $20.53 a share.

"Buyside expectations have been moderately fading over the past month, ahead of the forthcoming reinstatement of UNH's 2025 guide," the Leerink team wrote. "We think that $18 to $19 is generally the expectation, and anything in this zone should assuage fears given the materiality of the reduction in overall margins."

UnitedHealth originally forecast adjusted earnings in the range of $29.50 to $30 a share in December, before cutting that forecast in April and pulling it altogether a month later.

On a conference call in May, CEO Stephen Hemsley apologized to stakeholders. "Many of the issues standing in the way of achieving our goals, as well as our opportunities, are largely within our control," Hemsley said.

The company's UnitedHealthcare division has struggled as clients of its Medicare Advantage business use more medical services than it expected.

Leerink's updated forecast assumes "almost no margin" in the Medicare Advantage business, though analysts anticipate "a steady climb back to 3% margins" by 2028. That leaves them "reasonably constructive" about the balance between risks and potential rewards, Leerink said.

Still, the firm said, there is "no shortage of industry challenges across every product." In addition to reducing their forecast for 2025 earnings, the analysts also trimmed their 2026 estimate to $21 a share, from $26.36.

So what underpins Leerink's generally upbeat view? For starters, there is scarcity value. UnitedHealth Group has a strong market position as the largest health insurer in the U.S. and a major player on a global scale.

Leerink characterizes UnitedHealth as a "global growth stock that attracts a unique and diverse shareholder base." In addition to its record of achieving long-term targets, the company's liquidity and market capitalization just shy of $272.7 billion "should drive a higher relative valuation," the firm wrote.

"We view UNH as a simple way to invest into the secular growth of US medical spending," the analysts wrote. "UNH's asset base and earnings are diversified across a unique set of capabilities spanning the entirety of the care delivery system."

This refers to UnitedHealth's dual business model. The insurer operates through its UnitedHealthcare segment, which serves as a major driver of revenue, as well as its Optum health services division.

Even with the odds stacked against it, Leerink believes UnitedHealth is on pace to make a recovery. In the firm's view, growth could reaccelerate as soon as 2027.

"Against a challenging and dynamic backdrop, we're cautiously optimistic on the positive thesis from here," the analysts wrote.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 15, 2025 10:46 ET (14:46 GMT)

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