UnitedHealth Group (UNH) Stock Forecast & Price Target

UnitedHealth Group is expected to see growth in operating margins, with Medicare margins projected to expand from 2.3% in CY25 to 3.0% in CY26 and Commercial margins increasing from 5.5% in CY25 to 6.6% in CY26. The strong performance of the Optum segment, particularly with improved productivity and a growing patient base, positions the company to benefit from shifts in healthcare delivery models, thereby reducing medical cost trends. With a robust balance sheet, significant free cash flow, and anticipated capital deployment, UnitedHealth is well-positioned for accelerating earnings growth over the next two years.

The negative outlook on UnitedHealth Group's stock is primarily driven by projected declines in key margins, particularly in the Medicaid segment, where margins are expected to fall significantly from -0.1% in CY25 to -1.8% in CY26 due to the termination of 300,000 lives under new Medicaid work requirements. Additionally, the operating margin for Optum Health is anticipated to remain well below long-term targets, with CY25 overall operating margins hovering just under 3.0%, contrasting sharply with the expected 6.0% to 8.0% target. Furthermore, risks exacerbating this outlook include substantial government exposure, intensifying competition, and regulatory challenges that could hinder growth and integration efforts within its diverse healthcare offerings.