HSBC downgraded UnitedHealth shares, saying the recent rout has still not made the shares cheap enough to buy given the risks to earnings head.

The firm slashed UnitedHealth’s rating reduce from hold on Wednesday, and trimmed its price target to $270 per share from $490. HSBC’s forecast implies roughly 16% downside from Tuesday’s $321.58 close.

Shares are down more than 36% in 2025, as UnitedHealth contends with multiple headwinds which include the exit of its CEO earlier this month as well as a Department of Justice investigation into allegations of fraud.

″[The] new CEO has opportunity to start on a clean(er) slate, but we see risk to earnings growth along with policy overhang,” analyst Sidharth Sahoo wrote on Wednesday.

“While the bulls point to a 30% discount to historical P/E as an attractive entry point, we highlight three key reasons that could spoil the recovery journey,” added Sahoo, citing higher medical costs, political pressure on drug prices and lower overall profitability ahead, especially if there are cuts to Medicaid spending.

The stock trades at a forward price-earnings ratio of just 13, near its lowest of the last 10 years, according to HSBC.

UnitedHealth shares were down 5.3% in morning trading the HSBC call. The stock had garnered some interest recently from traders because of how deeply oversold the shares had become. The stock was up 10% since last Friday through Tuesday’s close.

But HSBC thinks the fundamentals will deteriorate some more, further hitting the stock.

“Regaining investor confidence by reminding of the vertically integrated value-based care offering can help UNH recover a part of the premium,” wrote the analyst. “But any further downward earnings revision would weigh on ROE and multiples.”

Meanwhile, UnitedHealth sank also following a Guardian investigation that claimed the healthcare giant secretly paid nursing homes bonuses to reduce hospital transfers and helped it gain Medicare enrollees.

According to the Guardian report, the payments were part of a cost-cutting strategy embedded in UnitedHealth’s nursing home initiative, which deployed company medical teams to facilities across the country. These teams reportedly worked to limit hospitalizations.

In some cases, the Guardian reported that “the company’s insertion of itself into nursing home emergency protocols helped delay or avert transfers for patients who could have benefited from immediate hospital care.”

One man reportedly suffered permanent brain damage after a delayed transfer for a suspected stroke.

The report cites internal documents, court filings, and whistleblower complaints alleging that UnitedHealth’s financial incentives led to delayed care and inappropriate pressure on staff to reduce hospital visits. 

“No one is truly investigating when a patient suffers harm,” a current UnitedHealth (NYSE:UNH) nurse practitioner told the Guardian.

The Guardian said UnitedHealth denied the allegations, calling the claim that its staff blocked hospital transfers “verifiably false.” 

A former nurse practitioner, Maxwell Ollivant, told the Guardian he filed a congressional declaration urging the federal government to hold the company accountable.