UnitedHealth (UNH), a health insurance company, has seen its shares drop 11% in the past month and a staggering 36% so far this year. Even with a stronger-than-anticipated profit report for the third quarter and an optimistic outlook for the full year, the stock feels the weight of concerns over escalating medical costs in its Medicare Advantage (MA) plans, along with an ongoing investigation by the Department of Justice. Despite these challenges, there’s a cautious sense of optimism on Wall Street regarding the stock, as analysts remain hopeful about UnitedHealth’s potential for recovery and its long-term growth trajectories.
Analyst views on UNH stock
After reviewing the third-quarter figures, Bernstein’s analyst Lance Wilkes increased his price target for UnitedHealth from $433 to $440, maintaining a buy recommendation. He anticipates that MA and Medicaid margins will rebound across the industry, driven by recent MA rate cuts, reduced competition, and upcoming reviews. While he acknowledges that growth may be impacted short-term by pricing strategies at MA and Optum Health, he is optimistic that margins will begin to improve relatively soon. Wilkes sees UNH as being attractively priced, especially with expectations of significant growth in earnings per share (EPS) over the next four years.
RBC Capital analyst Ben Hendricks also raised his price target for UNH, moving it from $286 to $408 while reiterating his buy rating. He attributes this optimism to observed growth across the industry. Hendricks pointed out that management’s confidence in pricing and their exit from certain MA plans should lead to better margins next year. Notably, the company has announced the discontinuation of over 100 MA programs. He views the consensus EPS estimate of $17.59 for 2026 as a solid starting point.
Hendricks predicts that UNH’s EPS growth will likely land on the lower end of its long-term annual growth target, which is between 13% and 16%, but expects a quicker margin recovery by 2027.
On the flip side, Deutsche Bank analyst George Hill revised his outlook for UNH, downgrading it from “buy” to “hold” and decreasing his price target from $333 to $275. He contends that the current valuation reflects anticipated earnings recovery in 2027 and 2028, but he expressed uncertainty regarding the recovery of Optum Health, the segment most adversely affected by recent challenges.
Is UNH a good stock to buy?
Even with short-term challenges, many analysts uphold a positive view of UnitedHealth’s long-term prospects.
Presently, Wall Street’s consensus rating for UnitedHealth stock is a Moderate Buy, which is based on 17 buy recommendations, three holds, and two sells. The average price target for UNH is $386.27, suggesting there’s a 19.1% potential for upside.
