By Mackenzie Tatananni

UnitedHealth Group stock was heading for its worst two-day stretch in 27 years after the major health insurer last week slashed its full-year outlook, citing headwinds related to Medicare Advantage.

Shares tumbled 5.7% to $428.13 on Monday. The stock closed down 22% on Thursday.

The stock has fallen 27% over this period, marking its biggest decline since a 31% plunge over the two days ended Aug. 7, 1998, according to Dow Jones Market Data.

UnitedHealth's first-quarter results sent a jolt through Wall Street as the company slashed its 2025 earnings guidance to a range of $26 to $26.50 a share, down from earlier estimates of $29.50 to $30 a share.

A number of firms trimmed their estimates following the guidance cut. Raymond James reiterated a Strong Buy rating while lowering the target price on the stock to $540 from $635.

Analysts with the firm noted that UnitedHealth's first-quarter miss was almost entirely attributed to Medicare Advantage trends, both within its UnitedHealthcare insurance business and Optum health services division.

"What can we say -- other than management's crystal ball has been unusually cloudy, and we have underestimated the challenges of navigating the new MA normal," the analysts wrote.

UnitedHealth said it failed to account for the number of Medicare Advantage patients who would seek treatment in the first quarter, as care activity increased at twice the rate the company had anticipated.

Its Optum business saw the addition of members who were new to Medicare Advantage or were forced to search for another plan as competitors withdrew from certain markets following cuts to Medicare Advantage reimbursements.

Oppenheimer & Co. lowered its price target on the shares to $600 from $640 while maintaining an Outperform rating. Analyst Michael Wiederhorn pointed out that Optum's issues were responsible for roughly two-thirds of UnitedHealth's guidance cut.

A major headwind was the ongoing transition to the CMS-HCC Model V28, which is used to calculate risk-adjusted payments to Medicare Advantage plans.

Still, the analyst remained upbeat. "Overall, UNH remains a premier operator and we believe the company will address these issues over the course of 2025, mitigating any impact for 2026," Wiederhorn said.

Of 29 analysts polled by FactSet, 28 rate UnitedHealth Group at Buy or the equivalent. Only one rates the stock at Underweight.

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

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April 21, 2025 13:32 ET (17:32 GMT)

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