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HSBC has updated UnitedHealth Group (New York Stock Exchange: UNH) to avoid the reduction, stating that it believes that many of the current risks facing the company are already built into the price.
The investment bank noted that there has been downward pressure on the stock due to the cyberattack on UnitedHealth's Change unit, a Medicare Advantage rate cut, antitrust investigations and increased scrutiny of the PBM sector.
“We believe that much of the risk related to the current turbulent environment is reflected in the share price,” HSBC added.
HSBC said it has lowered its estimates to reflect a medical loss ratio 50 bps higher than the current VA consensus for the first quarter and lower growth and margin assumptions for Optum Insights.
The bank added that its lower estimates have resulted in a price target of $460, up from $470, “implying 0% upside.”
“We like the company's strong capital deployment strategy and growth profile given its M&A capabilities, but take a cautious stance amid the current turbulent times,” HSBC added.
