UnitedHealth stock holds Buy rating at UBS amid Medicare Advantage changes

Investing.com - UBS maintained its Buy rating and $378.00 price target on UnitedHealth Group (NYSE:UNH) as the healthcare giant, currently valued at over $303 billion, navigates changes in its Medicare Advantage business. According to InvestingPro analysis, UNH appears undervalued based on its Fair Value estimate.

UnitedHealth reported no changes to its second-half expectations regarding cost trends across key business lines, with Medicaid and Commercial segments remaining consistent with previous commentary.

The company confirmed plans to exit Medicare Advantage plans affecting 600,000 members in PPO products, with approximately 200,000 representing full market exits. Management has lowered retention expectations for the remaining 400,000 members, suggesting the 600,000 impacted members may represent a complete loss for the insurance segment.

UnitedHealth noted that its decision to pull commissions on certain Medicare Advantage plans primarily affected PPO plans where the company is not seeking growth. The company indicated it has not previously cut commissions but plans to be more proactive with this approach moving forward.

The company provided no updates on Optum Health, which continues to undergo contract renegotiations and margin recovery efforts, while confirming that the AMED acquisition, expected to be dilutive by a few cents for 2025, has been incorporated into its $16 guidance.

In other recent news, UnitedHealth Group has been active with several developments. UBS raised its price target for the company to $378 from $330, maintaining a Buy rating. This adjustment follows UnitedHealth’s reaffirmation of its 2025 outlook and the indication of consistent Stars ratings for 2027. Additionally, Bernstein SocGen reiterated an Outperform rating with a price target of $379, highlighting UnitedHealth’s disclosure that approximately 78% of its Medicare Advantage members will be in 4+ star plans in 2026. This aligns with the company’s expectations and historical results. UnitedHealth’s CEO, Stephen Hemsley, also met with Trump’s chief of staff to discuss the Medicare health insurance program. Meanwhile, Cigna has seen Cantor Fitzgerald reiterate an Overweight rating with a price target of $365. This comes as 2026 Marketplace rates are finalized, aligning with payor proposals, though they are below the initially hoped-for increases.

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