UnitedHealth Group (UNH) Stock Forecast & Price Target

UnitedHealth Group is projected to experience expanding operating margins in both its Medicare and Commercial segments, with Medicare margins anticipated to rise from 2.3% in CY25 to 3.0% in CY26, and Commercial margins improving from 5.5% in CY25 to 6.6% in CY26. The Optum business segment is identified as a significant differentiator, contributing to lower medical cost trends and benefitting from service re-direction, which enhances patient visit productivity and overall efficiency. With a robust balance sheet and strong free cash flow, UnitedHealth Group is well-positioned for accelerated earnings growth over the next two years, backed by effective capital deployment strategies.

The financial outlook for UnitedHealth Group is negatively impacted by projected declining margins, specifically in the Medicaid segment, which are expected to fall from (0.1%) in CY25 to (1.8%) in CY26 due to the termination of 300,000 lives related to Medicaid work requirements. Additionally, the operating margin for Optum Health is anticipated to remain below the long-term target, expected to be just under 3.0% in CY25 compared to the 6.0% to 8.0% historical target, indicating potential operational inefficiencies. Furthermore, the company faces substantial risks including significant government exposure, competitive pressures, regulatory challenges, and difficulties in acquisitions and integrations, all of which may further exacerbate its financial performance.