HSBC Downgrades UnitedHealth Shares Amid Rising Concerns

NEW YORK, NY – HSBC has downgraded UnitedHealth Group Inc. shares, stating that the recent downturn has not made the stock cheap enough to buy given looming risks to earnings. The firm reduced UnitedHealth’s rating from ‘hold’ to ‘reduce’ on Wednesday and cut its price target to $270 per share from $490.

This new forecast suggests a potential 16% downside from Tuesday’s closing price of $321.58. UnitedHealth shares have dropped over 36% in 2025, facing various challenges including the recent exit of its CEO and an ongoing Department of Justice investigation into fraud allegations.

Analyst Sidharth Sahoo noted, “[The] new CEO has the opportunity to start on a clean slate, but we see risks to earnings growth along with policy overhang.” He went on to highlight that while some investors view a 30% discount to historical price-to-earnings ratios as an attractive entry point, there are three main reasons that could hinder a recovery.

These include rising medical costs, political pressure on drug pricing, and a potential decrease in profitability if there are cuts to Medicaid spending. The stock currently trades at a forward price-earnings ratio of 13, near its lowest level in the past decade, according to HSBC.

After the downgrade, UnitedHealth shares fell 6% in premarket trading. Despite gaining 10% since last Friday until Tuesday’s close, HSBC believes the company’s fundamentals may deteriorate, affecting the stock further.

<p"Regaining investor confidence by highlighting the vertically integrated value-based care offering can help UnitedHealth recover some of its premium," Sahoo said. He cautioned, however, that any additional downward earnings revisions would further impact return on equity and stock multiples.