Why UnitedHealth Group Stock Is Trading Lower Tuesday

UnitedHealth Group Inc UNH shares are trading lower Tuesday as healthcare provider stocks fall on the heels of finalized payment updates from the Centers for Medicare & Medicaid Services (CMS).

What Happened: Late Monday, the CMS finalized the calendar year 2025 Rate Announcement for the Medicare Advantage (MA) and Medicare Part D Prescription Drug (Part D) programs.

CMS payments to MA plans are expected to increase by 3.7% on average in 2025. The federal government is projected to pay between $500 and $600 billion in MA payments to private health plans in 2025.

The CMS also said it is finalizing improvements to the structure of the Medicare Part D drug benefit for 2025 that will result in lower drug costs. Annual out-of-pocket costs will be capped at $2,000 for people with Medicare Part D in 2025.

“In addition to improving the Part D drug benefit, we are updating payments to Medicare managed care plans for people who rely on these plans. The Biden-Harris Administration will continue to work on lowering health care costs for all Americans, fulfilling a promise the President made,” said U.S. Department of Health and Human Services Secretary Xavier Becerra.

UnitedHealth was among a group of healthcare provider stocks trading lower following the announcement as investor concerns over continued margin pressure on Medicare insurers are on the rise.

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UNH Stock Prediction 2024

Equity research can be a valuable source of information for learning about a company's fundamentals. Analysts create financial models based on the fundamentals and expected future earnings of a company to arrive at a price target and recommendation for the stock.

Shares of UnitedHealth have an average one-year price target of $601.11, representing an expected upside of 28.72%.

Because of differences in assumptions, analysts can arrive at very different price targets and recommendations. No analysts have bearish recommendations on UnitedHealth Group, while nine analysts have bullish ratings. The street high price target from BofA Securities is $675, while the street low from Barclays is $551.

UNH Price Action: UnitedHealth shares were down 5.4% at $463.25 at the time of publication, according to Benzinga Pro.

Photo: courtesy of UnitedHealth.