UnitedHealth (UNH) Stock: Analysts Stay Bullish as Earnings Approaches

TLDR

• UnitedHealth (UNH) reports Q4 2025 earnings January 27, with analysts expecting a 69% earnings drop to $2.12 per share due to rising Medicare Advantage medical costs
• Stock has fallen 34% over the past year facing Justice Department probe into Medicare billing practices and Senate investigation into payment tactics
• Analysts remain bullish with 16 Buy ratings and a $399.61 average price target, representing 12.7% upside potential
• Medicare Advantage 2027 advance notice could bring 9-10% rate increases, well above Street’s 5% forecast, potentially boosting margins
• UnitedHealth will rebate 2026 ACA plan profits to members while facing congressional scrutiny on affordability and rising medical cost ratios

UnitedHealth reports fourth-quarter fiscal 2025 results before market open on January 27. Wall Street expects earnings per share to drop 69% year-over-year to $2.12, while revenue is forecast to climb 13% to $113.8 billion.

UnitedHealth Group Incorporated, UNH

The health insurance giant faces mounting pressure from rising medical costs in its Medicare Advantage business. UNH has missed earnings estimates in two of the past eight quarters.

The stock closed at $354.74 on Thursday, up 2% from the previous session. Trading volume hit 7.36 million shares, 5% above average levels.

Shares have tumbled 34% over the past year. The decline stems from both company-specific issues and broader sector pressures.

A Justice Department probe into alleged Medicare Advantage billing malpractices weighs on investor sentiment. A recent Senate investigation found UnitedHealth uses aggressive tactics to boost Medicare payments.

President Trump’s proposed healthcare plan adds uncertainty. The plan could redirect subsidies directly to consumers, potentially shrinking revenue from ACA marketplace plans.

UnitedHealth told Congress it will rebate 2026 ACA plan profits to members. The move benefits consumers but creates a near-term hit to profits.

Analyst Optimism Persists

Five analysts reiterated Buy ratings ahead of the earnings report. Bernstein analyst Lance Wilkes named UnitedHealth his top pick for 2026.

Wilkes cites gradual recovery in Medicare Advantage and Medicaid segments. He points to improving pricing and utilization trends as catalysts.

His price target of $444 sits at the top of the Street’s range. That implies 27.7% upside from current levels.

JPMorgan lifted its target from $310 to $425, rating the stock overweight. Mizuho raised its objective from $300 to $430 with an outperform rating.

Medicare Rate Decision Could Shift Sentiment

Mizuho analyst Ann Hynes sees the Medicare Advantage 2027 advance notice as a key catalyst. She expects a 9-10% rate increase compared to the Street’s 5% forecast.

Higher rates would enhance margins for managed care stocks. UnitedHealth, Humana, and Elevance stand to benefit most given their Medicare Advantage exposure.

The rate decision could drive gains similar to the 2026 announcement. Hynes views this as a turning point for the sector’s recovery trajectory.

Options traders anticipate a 6.31% move in either direction following earnings. That’s below the stock’s average post-earnings move of 8.84% over the past four quarters.

Investors will scrutinize medical cost trends, medical cost ratio, and membership mix beyond headline numbers. Rising medical costs and a higher medical cost ratio could compress margins going forward.

The consensus rating stands at Strong Buy based on 16 Buy and three Hold ratings. The average price target of $399.61 represents 12.7% upside potential.

Institutional investors own 87.86% of outstanding shares. Several hedge funds increased positions during the fourth quarter, including Brighton Jones LLC which raised its stake by 176.2%.

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