Deutsche Bank says take chance on beaten-up UnitedHealth because of valuation
UnitedHealth could be a bargain for investors, according to Deutsche Bank. Analyst George Hill maintained his buy rating along with his target price of $362. That, he said, reflects an earnings multiple of 16 — which sits at the low end of the stock's 10-year trading range. Hill's forecast implies UnitedHealth shares could gain 21.4% from Thursday's close. "We're hanging our gloves on valuation: We maintain our buy rating on UNH's shares, as even here using a trough-ish multiple on our expected 2025 trough earnings still implies meaningful upside to the shares," Hill said in a Thursday note to clients. "We continue to see the company as a defensive name in the large-cap healthcare services space, though UNH has been burdened by a rotating array of headwinds over the last several years," he added. UnitedHealth shares have suffered a 41% decline this year as the company deals with multiple setbacks, including the recent exit of its CEO , suspension of its annual forecast, reports of a Department of Justice investigation into fraud allegations and higher medical costs. "Our target multiple reflects the continued challenges, regulatory overhang, and persistent negative sentiment tied to the MCO space," Hill said. UNH 1Y mountain UnitedHealth 1-yr chart Hill thinks there's plenty of upside ahead for UnitedHealth, but said the company should ditch its current long-term guidance, which sits higher than the range of most other managed care companies. He expects the company's core managed care business to generate operating profit growth of between 3% and 5% as Medicare Advantage plans mature. The company's ability to grow its operating profit growth through acquisition will be "challenged at best," according to the analyst. He added that there also remains an ongoing regulatory overhang on the company and negative sentiment in the managed care space.
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