UnitedHealth Group (UNH) Stock Forecast & Price Target

UnitedHealth Group is expected to see an expansion in Medicare operating margins from 2.3% in CY25 to 3.0% in CY26, alongside a rise in Commercial operating margins from 5.5% to 6.6% during the same period, highlighting improved profitability across its various business lines. The Optum segment is anticipated to be a significant differentiator, driving lower medical cost trends and benefiting from enhanced productivity and patient acquisition strategies, particularly in the East region where it serves approximately 5 million patients. With a robust balance sheet and strong free cash flow, the company's capital deployment is likely to strengthen its core trends, fostering confidence in accelerating earnings growth over the next two years.

UnitedHealth Group is projected to experience a decline in its Medicaid margins from -0.1% in CY25 to -1.8% in CY26, attributed to the termination of 300,000 lives due to new Medicaid work requirements. Additionally, the company anticipates its Optum Health's CY25 operating margins to remain significantly below long-term targets, with the overall operating margin dropping to just under 3.0% compared to the expected 6.0% to 8.0% target. Key risks affecting the outlook include substantial exposure to government programs, an increasingly competitive environment, and challenges related to acquisition integration and regulatory changes.