UnitedHealth: Buy Rating Reaffirmed on Resilient Earnings, Margin Discipline, and Long-Term Growth Despite Medicare Policy Headwinds

UnitedHealth, the Healthcare sector company, was revisited by a Wall Street analyst today. Analyst Erin Wright from Morgan Stanley maintained a Buy rating on the stock and has a $375.00 price target.

Erin Wright has given his Buy rating due to a combination of factors that underscore UnitedHealth’s solid underlying earnings trajectory and disciplined margin management despite policy headwinds. The company’s 2025 performance is tracking largely as anticipated (excluding charges), and the 2026 guidance points to approximately mid‑single‑digit to high‑single‑digit EPS growth, slightly above prior expectations, which supports confidence in the earnings outlook. Management is targeting Medicare Advantage margin expansion in 2026 by intentionally accepting a larger reduction in MA membership, particularly across group, individual, and D‑SNP segments, which aligns with a strategy of prioritizing profitability over volume.

At the same time, Wright acknowledges that the recent Medicare Advantage Advance Rate Notice was weaker than management and investors had hoped, increasing near‑term uncertainty and implying additional benefit cuts and geographic rationalization in 2027 if the final rate is not improved. Even so, she highlights that UnitedHealth’s long‑term margin and EPS growth ambitions in the low‑ to mid‑teens remain intact, supported by operational fixes and stabilization within Optum Health. While investor sentiment toward managed care has deteriorated amid the policy overhang, Wright views the current skepticism as overly discounted relative to UnitedHealth’s scale, diversified earnings base, and ability to adapt its MA footprint and benefits design. This combination of resilient fundamentals, proactive margin protection, and attractive long‑term growth targets underpins her Buy recommendation on the stock, despite the policy-driven volatility in the near term.

In another report released today, KeyBanc also maintained a Buy rating on the stock with a $400.00 price target.