UnitedHealth (NYSE:UNH) stock was put through the wringer in the first half of last year, as a combination of factors – weaker-than-expected quarterly results, a CEO change, the withdrawal of its annual guidance, and higher costs tied to UHC’s Medicare Advantage (MA) membership – pushed shares lower.
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But sentiment improved in the second half of the year – shares are up by 26% over the past 6 months – supported by preliminary clarity for 2026 and UNH’s expectation of reducing MA membership by approximately 1 million lives while improving MA profitability.
That, says Morgan Stanley’s Erin Wright, an analyst ranked among the top 3% on Wall Street, is a “key component to the turnaround story.”
That turnaround story, according to Wright, is at play right now. As such, with the healthcare giant slated to announce 4Q25 earnings tomorrow (Jan 27) before the market opens, boosted by a “disciplined MA benefit reset instilling confidence in its margin improvement plan,” Wright believes sentiment “should continue to ramp.”
Heading into the print, for Q4, Wright is “fairly in line” with consensus, with an MLR (medical loss ratio) expectation of 92.2% vs. the Street at 92.1% and adj. EPS of $2.08 vs. consensus at $2.12, metrics Wrights thinks are beatable. The focus, however, will be on any updates or additional details around the “high-level 2026 guidance” offered in November. Wright is calling for a 2026 MLR of 88.9% compared with consensus at 88.8%, and will be keeping an eye out for any updates on the expectation of a 1 million decline in Medicare Advantage membership.
All told, Wright expects a “clean print” and sees scope for UNH to lift its 2026 EPS guide modestly above the current ~8% year-over-year baseline, implying EPS of more than $17.55 vs. the Street and MS estimates of $17.58 and $17.74, respectively. Here, Wright reminds investors that the long-term EPS growth algorithm is 13–16%. In addition, delivery of clear proof points over the next few quarters would give the company the ability to return to its historical beat-and-raise pattern, which remains a “key expectation” supporting Wright’s ongoing positive thesis.
Looking further ahead to 2027, although Wright’s model assumptions remain conservative, the 5-star analyst sees a pathway to 31% upside vs. her current estimates and 28% upside vs. the Street in 2027, assuming the company executes on its strategy and delivers margins closer to target ranges. This take also factors in the reality that Optum Health remains a “multi-year turnaround.” Importantly, this upside case depends on a relatively stable external environment, with no big disruptions such as adverse regulatory changes, risk adjustment pressure, or unfavorable rate notices.
Bottom line, Wright is sticking with her Overweight (i.e., Buy) rating on the shares. While her updated sum-of-the-parts analysis trims the price target slightly from $411 to $409, she still sees room for a 16% upside over the next 12 months. (To watch Wright’s track record, click here)
The rest of Wall Street is largely on the same page. UNH earns a Strong Buy consensus rating, backed by 16 Buys and just 3 Holds. The Street-wide outlook points to ~14% upside over the next year, based on an average price target of $399.50. (See UNH stock forecast)
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.