UnitedHealth Group Inc ( UNH ) shares are trading lower Tuesday as healthcare provider stocks fall on the heels of finalized payment updates from the Centers for Medicare & Medicaid Services (CMS).

What Happened: Late Monday, the CMS finalized the calendar year 2025 Rate Announcement for the Medicare Advantage (MA) and Medicare Part D Prescription Drug (Part D) programs.

CMS payments to MA plans are expected to increase by 3.7% on average in 2025. The federal government is projected to pay between $500 and $600 billion in MA payments to private health plans in 2025.

The CMS also said it is finalizing improvements to the structure of the Medicare Part D drug benefit for 2025 that will result in lower drug costs. Annual out-of-pocket costs will be capped at $2,000 for people with Medicare Part D in 2025.

“In addition to improving the Part D drug benefit, we are updating payments to Medicare managed care plans for people who rely on these plans. The Biden-Harris Administration will continue to work on lowering health care costs for all Americans, fulfilling a promise the President made,” said U.S. Department of Health and Human Services Secretary Xavier Becerra.

UnitedHealth ( UNH ) was among a group of healthcare provider stocks trading lower following the announcement as investor concerns over continued margin pressure on Medicare insurers are on the rise.

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UNH Stock Prediction 2024

Equity research can be a valuable source of information for learning about a company's fundamentals. Analysts create financial models based on the fundamentals and expected future earnings of a company to arrive at a price target and recommendation for the stock.

Shares of UnitedHealth ( UNH ) have an average one-year price target of $601.11, representing an expected upside of 28.72%.

Because of differences in assumptions, analysts can arrive at very different price targets and recommendations. No analysts have bearish recommendations on UnitedHealth Group ( UNH ), while nine analysts have bullish ratings. The street high price target from BofA Securities is $675, while the street low from Barclays is $551.

UNH Price Action: UnitedHealth ( UNH ) shares were down 5.4% at $463.25 at the time of publication, according to Benzinga Pro.