Piper Sandler has reaffirmed an Overweight rating on UnitedHealth Group Inc. (NYSE: UNH) and retained a $390.00 price target, signaling potential upside from the stock's then-current trading level of $285.59. InvestingPro analysis referenced in the original reporting indicated a 29% implied upside based on analyst targets.
The research firm highlighted its confidence in UnitedHealth’s Optum Health business after reviewing disclosures tied to the company’s second-quarter 2025 earnings report. Piper Sandler’s review sought to contextualize an operating income shortfall at Optum Health for calendar year 2025 and to assess the division’s trajectory into 2026.
Piper Sandler concluded that UnitedHealth’s 2026 guidance for Optum Health operating income appears attainable if the company is able to sustain the earnings trends seen through 2025. The firm also pointed to several sources of potential upside beyond baseline earnings persistence, specifically naming strategic contracting, benefit design changes, pricing actions, utilization management, and improvements in risk adjustment as levers that could enhance results.
In its analysis, Piper Sandler noted that UnitedHealth has taken deliberate steps intended to restore margins. Those measures include product rationalization and efforts to optimize the physical and geographic footprint of the business. The firm described the insurer’s 2025 approach to assessing and renegotiating risk contracts as involving "an unprecedented level of strategic and actuarial rigor." According to Piper Sandler, these actions should reduce volatility and exposure while enhancing yield, improving trend control, and increasing profitability at Optum Health in 2026.
Separately, UnitedHealth reported fourth-quarter 2025 results that met its earnings per share forecast of $2.11 but posted revenues of $113.2 billion, which fell short of the $113.73 billion that had been anticipated. The revenue shortfall was flagged as a material development and drew a negative reaction from the market. Analysts had projected higher revenue, and the company’s mixed results - meeting EPS while missing revenue expectations - were highlighted as a source of concern.
The combination of Piper Sandler’s positive stance on near-term recovery at Optum Health and the revenue miss in the fourth quarter of 2025 creates a mixed picture. The analyst case rests on the persistence of 2025 earnings trends and additional upside from contract and pricing initiatives, while the recent revenue disappointment underscores near-term execution and top-line risk.
Summary
Piper Sandler reiterated an Overweight rating and a $390 price target on UnitedHealth, citing confidence in Optum Health’s path to margin recovery and achievable 2026 operating income guidance. UnitedHealth met Q4 2025 EPS expectations of $2.11 but missed revenue estimates, reporting $113.2 billion versus $113.73 billion expected, which prompted negative market reaction.
Key points
- Piper Sandler maintains Overweight and a $390 price target for UnitedHealth, implying significant upside from $285.59.
- Analysts see 2026 Optum Health operating income guidance as achievable through 2025 earnings persistence, with additional upside from contracting, pricing, utilization management, benefit design, and risk adjustment.
- UnitedHealth met Q4 2025 EPS expectations ($2.11) but missed revenue estimates ($113.2B reported vs $113.73B expected), drawing negative market response.
Risks and uncertainties
- Top-line risk: The revenue shortfall in Q4 2025 highlights exposure in UnitedHealth’s ability to meet revenue expectations, affecting the healthcare sector and health insurers specifically.
- Execution risk at Optum Health: Achieving 2026 operating income guidance depends on sustaining 2025 earning levels and successful implementation of contracting, pricing, and utilization measures, which impacts managed care and provider-aligned services.
- Volatility from contract renegotiations: While the company has pursued rigorous risk contract reviews, the outcome and timing of renegotiations could affect margin stability and expected yield improvements.
Investors and market participants are likely to monitor subsequent earnings reports for clarity on revenue trends and the effectiveness of the margin-restoration measures at Optum Health.