UnitedHealth (NYSE:UNH) stock grabbed headlines last week, as Warren Buffett – the legendary Oracle of Omaha – disclosed a $1.6 billion stake, a move that immediately caught Wall Street’s attention.
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After a brutal stretch in 2025 marked by a 50% plunge in the stock due to soaring medical costs, regulatory scrutiny, leadership upheaval, and withdrawn earnings guidance, Buffett’s investment stood out as a vote of confidence that helped spark a rally in UNH shares. More importantly, given Buffett’s oft-repeated mantra that his favorite holding period is “forever,” the move carries the weight of a long-term endorsement – particularly in a sector where Berkshire has decades of experience.
Still, not everyone sees Buffett’s buy as a signal for investors to rush in. Bank of America analyst Kevin Fischbeck agrees that it’s a “positive sign,” but cautions that few retail investors share Buffett’s time horizon.
“If you can take a 5-year view, you likely will do well,” Fischbeck notes, “but few investors have that investment horizon, and those that do, still want to see positive returns each year over that time.”
That tension between Buffett’s timeless patience and Wall Street’s year-to-year reality is where Fischbeck sees trouble. The analyst argues that UNH’s path higher is unlikely before 2027, pointing to three key uncertainties that could weigh on performance. Any negative outcome, he warns, could delay meaningful upside by a full year.
The first question centers on whether earnings have reached a new baseline. Fischbeck believes they have, stabilizing around $16.80 to $17.00 for the year ahead – modest growth from UNH’s $16.00 forecast for 2025. Achieving that range would mark progress, but hardly the kind of surge investors might hope for.
The second concern is UNH’s Medicare Advantage (MA) membership and the percentage that qualifies for a 5% quality bonus. “Stars performance can make or break MA profitability,” Fischbeck stresses, warning that management missteps could leave UNH at risk of falling below industry norms – a “negative surprise” when CMS data is released in mid-October.
However, the biggest risk the analyst identifies revolves around a potential 2027 MA coding adjustment. This is not just a risk for the upcoming year, but will remain an open issue in 2027 as well.
“A new coding adjustment… could easily wipe out the progress UNH makes in coming years,” adds Fischbeck, who estimates that the last coding adjustment ended up costing UNH some $16 billion in revenues.
Amid this “significant uncertainty,” Fischbeck remains cautious, assigning UNH shares a Neutral rating even as he raises his price target from $290 to $325 – implying an 8% upside. (To watch Fischbeck’s track record, click here)
The broader Wall Street view, on the other hand, offers a slightly more upbeat prognosis. With 18 Buys, 2 Holds, and 2 Sells, UNH boasts a Moderate Buy consensus rating. (See UNH stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.