UnitedHealth (UNH) jumped nearly 9% on Tuesday, its second-biggest one-day gain this year, after the company gave an upbeat update on its Medicare Star Ratings. The move cut the stock’s year-to-date decline to about 30%.
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The news sparked a sector-wide rally. Centene (CNC) rose 7.7%, CVS Health (CVS) added 2%, Clover Health (CLOV) gained 5%, and Alignment Healthcare (ALHC) advanced 1.6%.
But not all insurers benefited. Humana (HUM) tumbled 12% on Tuesday, the steepest drop in the S&P 500. Unlike UnitedHealth, Humana came under pressure after analysts at Leerink Partners warned that the Centers for Medicare & Medicaid Services (CMS) could apply tougher evaluation standards in 2026. The insurer also refiled a lawsuit in July, challenging its earlier Medicare Advantage ratings.
Star Ratings Support UnitedHealth’s Outlook
In a recent filing, UNH said that about 78% of its Medicare Advantage members could be in plans rated four stars or higher for the 2026 Payment Year. These ratings matter because plans at that level qualify for bonus payments from the CMS, while also making the plans more attractive to seniors choosing coverage.
The CMS Star Ratings system evaluates insurers on factors such as patient care, customer service, and health outcomes. Companies with stronger ratings not only receive bonus funds but also gain a competitive edge in signing up new members.
For UnitedHealth, keeping a high share of members in four-star plans fits with its earlier performance and management’s earlier guidance. Although the figures are preliminary and subject to revision, the update gave investors more confidence that the company can sustain profitability in its Medicare Advantage business.
Earnings Outlook Remains Steady Despite Amedisys Deal
Along with the ratings update, UnitedHealth recently reiterated its 2025 adjusted EPS forecast of at least $16.00.
The outlook accounts for the recently closed acquisition of Amedisys, a home-health services provider. Management said the deal could slightly weigh on near-term profit due to financing and integration costs, but it supports the company’s push into value-based care.
Is UNH Stock a Buy, Hold, or Sell?
Wall Street has a Strong Buy consensus rating on UnitedHealth stock based on 18 Buys, two Holds, and one Sell recommendation. At $323.16, the average UnitedHealth stock price target implies a 7.12% downside potential.
