11:23 AM EDT, 07/17/2024 (MT Newswires) -- UnitedHealth Group's ( UNH ) medical loss ratio, or MLR, miss in Q2 was highly expected and there is a clear visibility in H2 with one-time items in the rearview, Morgan Stanley said in a late Tuesday note to clients.

The company reaffirmed its 2024 adjusted earnings outlook of $27.50 to $28 per share as it "remains diligent on costs, absorbing an additional 30c in Change HC disruption headwinds," the note added.

Additionally, UnitedHealth's ( UNH ) management did not provide a clear M&A growth rate for 2025, but indicated that "we're in a posture on how we've priced those products as we'll be comfortable with whatever growth is the outcome on the products that we bring to marketplace in 2025."

Key challenges to the company include the continued phase-in of the v28 risk model and uncertainty regarding the Inflation Reduction Act's implementation, the note said.

Morgan Stanley expects UnitedHealth ( UNH ) to report 2024 adjusted EPS of $27.68 and revenue of $401.59 billion.

Morgan Stanley raised UnitedHealth's ( UNH ) price target to $615 from $595 and maintained an overweight rating on the stock.

Shares of the company were up 2.8% in recent Wednesday trading.

Price: 564.36, Change: +15.49, Percent Change: +2.82