Deutsche Bank Downgraded UHG Stock Rating, Expectations Changed

Deutsche Bank downgraded UnitedHealth Group’s stock rating from Buy to Hold. The bank noted that the stock’s valuation now reflects the expected improvement in earnings. The price target for the stock was raised to $333, indicating a potential decline of 9% from current levels.

Analyst George Hill stated that UnitedHealth stocks have already priced in long-standing earnings growth expectations, expressing that there is little room for further increases despite improving margin trends.

UnitedHealth Group shares are trading at approximately 21 times projected 2026 earnings. Deutsche Bank emphasized that this premium valuation is “near the peak” considering the uncertainties surrounding earnings. While the bank expects moderate earnings growth for 2026, it anticipates double-digit growth in 2027 as margins recover across the sector.

However, Deutsche Bank noted that the outlook related to the transformation in Optum Health is limited and expressed concerns for the company’s weakest performing division. Additionally, it warned that earnings for Optum Insight and Optum Rx could slow down next year. The bank predicts that Medicaid will not reach its lowest point until 2026.

“We do not believe that 2026 will be the lowest earnings point for Medicaid, and we expect Optum Insight and Optum Rx to experience earnings slowdowns in 2026,” the analysts stated. “The high valuation and near-term earnings uncertainty keep us on the sidelines,” they added.

The high price target is related to confidence that profits have reached their bottom, but the bank also emphasized that recent gains have advanced too far relative to fundamentals.