UnitedHealth stock price target raised to $335 from $275 at TD Cowen

Investing.com - TD Cowen raised its price target on UnitedHealth Group (NYSE:UNH) to $335 from $275 while maintaining a Hold rating, citing an improving outlook for Medicare Advantage (MA) margins in 2027 and beyond. The healthcare giant, with a market capitalization of $327 billion, maintains a strong financial position, earning a "GREAT" rating on InvestingPro’s comprehensive health score system.

The firm’s analysis points to a potentially favorable 2027 MA Advance Notice, with a base case expectation of a 5.5-6.0% rate increase, above current investor expectations. TD Cowen noted that 2025 cost trends continue to run above Centers for Medicare & Medicaid Services (CMS) projections, which should logically be accounted for in the 2027 rate.

UnitedHealth has implemented significant benefit reductions for 2026 plans, according to TD Cowen’s analysis. For Special Needs Plans (SNP), over-the-counter benefits decreased 18% year-over-year, while hearing, dental, and vision maximum benefits dropped 38%. Non-SNP over-the-counter benefits were reduced by 36%.

Despite the long-term positive outlook, TD Cowen remains cautious about UnitedHealth’s 2026 performance, specifically citing concerns about the impact of v28 risk model changes on both UnitedHealthcare and Optum Health divisions. The firm indicated it would become more constructive on the stock with additional clarity on this point.

The new price target of $335 represents 19.5x TD Cowen’s 2026 adjusted earnings per share estimate, reflecting a discount to the S&P 500 based on a three-year median comparison. UnitedHealth currently trades at approximately 21x forward price-to-earnings ratio, which is a premium compared to its historical 17-18x three and five-year averages.

In other recent news, UnitedHealth Group is in the spotlight with several key developments. The company is set to announce its third-quarter earnings on October 28, with analysts projecting earnings per share of $2.81 and revenue of $113.14 billion. In anticipation of these results, Bernstein SocGen Group has raised its price target for UnitedHealth to $433, maintaining an Outperform rating. Similarly, KeyBanc has increased its price target to $400, citing favorable star ratings results, while Cantor Fitzgerald reiterated an Overweight rating with a price target of $440.

Additionally, UnitedHealthcare, a subsidiary of UnitedHealth Group, unveiled its 2026 Medicare Advantage plans, ensuring coverage for 94% of eligible beneficiaries despite funding cuts. Meanwhile, CVS Health has maintained stable Medicare Advantage Star Ratings, aligning with Mizuho’s expectations, which led Mizuho to reiterate an Outperform rating with a price target of $80. These developments highlight ongoing strategic moves and analyst confidence in UnitedHealth and CVS Health amidst a competitive healthcare landscape.

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