10:51 AM EDT, 05/16/2025 (MT Newswires) -- UnitedHealth ( UNH ) deals with reduced earnings expectations and a compressed valuation multiple as higher medical costs and renewed Department of Justice scrutiny raise concerns around operational headwinds and legal risks, RBC Capital Markets said in a Thursday note.

The firm said that the initial share price drop, after unconfirmed reports of Medicare fraud and a leadership shake-up, prices in risk of rising medical utilization and the subsequent decline was driven by renewed legal fears.

While DOJ probes into UnitedHealth's ( UNH ) practices, particularly Medicare documentation and the integration of OptumHealth, are not new, the latest wave of negative headlines appears to be eroding investor confidence more significantly than in the past, according to the note.

"We believe current levels are untenable over the long-term given UnitedHealth's ( UNH ) leading Medicare Advantage market share, diversified benefits business, leading value-based care platform with OptumHealth, and a significantly more favorable margin profile versus peers," RBC added.

The firm reduced its price target on the company's stock to $355 from $525 with an outperform rating.

Price: 278.43, Change: +4.08, Percent Change: +1.49