‘Time to Load Up,’ Says KeyBanc About UnitedHealth Stock

UnitedHealth (NYSE:UNH) has had a very disappointing run so far this year, with shares of the healthcare giant down roughly 40% year-to-date, pushing its P/E valuation to levels not seen in over a decade.

What began as a year of high hopes – buoyed by expectations of a favorable Medicare Advantage underwriting cycle under the new administration and UnitedHealth’s strength relative to competitors – has unraveled rapidly.

It started with underwhelming Q1 results, followed by a surprising CEO transition, suspended guidance, and signs of deeper challenges beneath the surface. These included rising costs for Medicare Advantage members at UHC, and under-coding issues tied to new Optum enrollees in 2024. Adding further pressure, the Wall Street Journal reported that the Department of Justice is investigating the company for potential Medicare fraud.

But savvy investors take note. Beaten-down stocks often represent a big opportunity – that is after all what the maxim “buy low, sell high” is all about. And it’s definitely time to load up, says KeyBanc’s Matthew Gillmor.

“In our view,” said the analyst, “the stock has likely overshot to the downside.”

Gillmore explains why. Historically, UNH has traded at a forward P/E multiple of 17–19x, but it now trades closer to 12x. Assuming a more normalized long-term multiple of 14x, this suggests an EPS power of roughly $21.50 – about $8.25 per share below the company’s original 2025 guide. On a pre-tax basis, this equates to a $9.5 billion shortfall.

In analyzing this gap, Gillmor thinks the market is assigning significant weight to pressures from Optum’s coding headwinds and margin compression in the MA segment.

“We figure this implied EPS power potentially embeds ~0% margins for MA,” Gillmor explained. “We think this is a very conservative posture that is unlikely to sustain over the long term.”

Additionally, Gillmor thinks the challenges the company faces this year should be fixed in 2026. According to the analyst, the necessary corrective actions are already well understood: propose more conservative MA bids in June and make use of the HouseCalls program to improve coding accuracy for new members. Even partial success in implementing these measures could result in a meaningful earnings boost next year.

For instance, recovering just $1.5 billion in Optum revenue – roughly half of the estimated opportunity – and improving MA margins by just 1% could add approximately $2.50 to EPS, representing an 11% uplift relative to 2025 consensus estimates.

For jittery investors, Gillmor advises to hold steady as the current share price is too good to ignore.

“While patience will be required and uncertainty is elevated, we think the 12- month+ setup from here is attractive: UNH is the bellwether MCO, trading at a historically discounted valuation on depressed margins,” the analyst summed up.

Bottom line, Gillmor assigns an Outperform (i.e., Buy) rating for UNH shares and although his price target goes from $450 to $400, the revised figure still offers a one-year upside of 31%. (To watch Gillmor’s track record, click here)

Turning now to the broader Street view, where UNH stock claims a Moderate Buy consensus rating based on a mix of 19 Buys, 6 Holds and 1 Sell. Going by the $378.32 average price target, a year from now, shares will be changing hands for a 24% premium. (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.