Evercore ISI has reiterated an Outperform rating on UnitedHealth Group (UNH) and set a price target of $400 following the company’s fourth-quarter financial release. UnitedHealth carries a market capitalization of $318.53 billion and was trading at $351.64 - a level that InvestingPro’s Fair Value assessment indicates is below the company’s fair value.
On an adjusted basis, UnitedHealth reported fourth-quarter earnings per share of $2.11, which met consensus estimates. The company’s adjusted medical loss ratio for the quarter was 91.5%, outperforming the consensus expectation of 92.0%. By contrast, the adjusted operating expense ratio was 13.5%, higher than the 12.7% that analysts expected.
Within the Optum segment, adjusted margins came in at 3.8%, representing a 55 basis-point shortfall versus consensus after accounting for third-party loss reserve items and other restructurings. The shortfall was concentrated in Optum Health, which reported an adjusted operating margin of -0.8% versus the 1.5% consensus figure.
For fiscal year 2026, UnitedHealth provided guidance for adjusted earnings per share of at least $17.75, which aligns with consensus estimates. The company also issued membership guidance that fell short of street expectations at the midpoints: Medicare Advantage membership is projected between 7,245,000 and 7,295,000 lives - a midpoint that is 3.2% below consensus - while Medicaid membership is guided at 6,665,000 to 6,815,000 lives, a midpoint 9.8% below consensus.
On a segment basis, UnitedHealth guided adjusted Optum margins for 2026 to 4.9%, which is 14 basis points above consensus. However, the company expects Optum Health operating margins of 1.7% for 2026, which is 150 basis points below consensus and reflects the impact of roughly $623 million in amortization of third-party loss contracts.
Market performance has been notable: the stock returned 3.9% over the past week and has gained 26.75% over the last six months. From a valuation perspective, the shares trade at a P/E ratio of 18.27 and carry a PEG ratio of 0.73, metrics that InvestingPro highlights as indicating a relatively low P/E versus near-term earnings growth.
Beyond the quarterly numbers and guidance, UnitedHealth has been in the spotlight for several other reasons. The Centers for Medicare & Medicaid Services announced a 0.09% increase in Medicare Advantage payment rates for 2027, a change that fell well short of some analysts’ expectations of increases up to 6%. That announcement contributed to a sector-wide selloff that affected UnitedHealth and its peers.
Amid the market reaction, Bernstein SocGen Group maintained its Outperform rating on UnitedHealth and put a $444 price target on the shares, projecting a 33% upside from current levels and forecasting that shares could rise roughly 80% over the next three years.
Operationally, UnitedHealthcare has launched a pilot program to accelerate Medicare Advantage payments to rural hospitals, aimed at shortening collection times and improving cash flow for those facilities. At the same time, a Senate Judiciary Committee report criticized the company’s Medicare Advantage risk adjustment practices, alleging aggressive tactics intended to increase payments beyond the original purpose of the program. Despite these regulatory headwinds, Bernstein kept a positive stance on the stock.
Investors and analysts will likely monitor several moving parts going forward: Optum margin recovery, the outcome and implications of regulatory scrutiny, membership trends in government programs, and the impact of amortization and restructuring items tied to third-party loss contracts. These factors together will influence how the market prices UnitedHealth relative to the firm’s guidance and the analyst price targets from firms that continue to rate the stock Outperform.