UnitedHealth Group (UNH) faced a punishing week as shares tumbled nearly 20% on Tuesday following a one-two punch of disappointing Q4 earnings and an unexpected Medicare Advantage rate proposal from the Centers for Medicare & Medicaid Services. The healthcare giant’s revenue guidance for 2026 fell well below Street expectations, signaling what would be its first annual revenue decline in more than three decades.
Still, despite the sharp selloff, analyst sentiment remains mixed, with several experts maintaining Buy ratings even while they acknowledged the challenging road ahead.
What Happened to UnitedHealth?
UnitedHealth reported Q4 2025 adjusted earnings per share of $2.11, in line with consensus. Meanwhile, the firm’s revenue of $113.2 billion missed estimates by approximately $520 million despite 12% year-over-year growth. The company also took a $1.6 billion post-tax charge related to restructuring, divestitures, and lingering cyberattack costs.
Investors were more concerned with the 2026 outlook. Management guided for revenue of more than $439 billion, significantly below the $456 billion analyst consensus, and adjusted EPS of greater than $17.75.
The earnings report came just hours after the CMS proposed a net average payment increase of just 0.09% for Medicare Advantage plans in 2027. This was dramatically below the 4% to 6% increase analysts had anticipated.
This proposal sent managed care stocks tumbling in after-hours trading, with Humana (HUM), CVS Health (CVS), and Elevance Health (ELV) all experiencing significant declines. The combination of weak guidance and regulatory headwinds wiped out more than $50 billion in market capitalization for UNH in a single trading session.
Management indicated the company would prioritize margin recovery over membership growth in 2026, expecting Medicare Advantage membership to contract by 1.3 to 1.4 million members. The medical care ratio came in at 89.1% for 2025, up from 85.5% in 2024, reflecting pressure from Medicare funding reductions and elevated medical cost trends. CEO Stephen Hemsley noted that the company had “confronted challenges directly” and emerged from 2025 as “a much stronger company.”
What Do Analysts Say About UnitedHealth’s Future?
Despite the sharp decline, several analysts maintained bullish stances on UnitedHealth, viewing the selloff as overdone. Bulls pointed to the company’s strong cash flow generation of $19.7 billion in 2025, its strategic shift toward margin recovery, and the potential for CMS to revise the final Medicare Advantage rate higher by April (as has occurred in eight of the past ten years). The company’s investments in AI and automation, expected to drive $1 billion in cost savings in 2026, also provide reasons for optimism.
Bears, however, highlighted the structural challenges facing the Medicare Advantage business, with rising medical costs and flat government reimbursements creating a widening margin squeeze. The medical care ratio remains elevated at nearly 89%, well above historical levels of 82% to 85%, the bears pointed out.
Some analysts also expressed concern about the company’s ability to meet even its conservative guidance, given the uncertainty around 2027 rates and the potential for further membership losses.
Here’s a breakdown of what some analysts had to say:
Mike Zaccardi, CFA, CMT, Rating: Buy: “The stock appears attractive from a valuation perspective, but the technicals clearly show the bears being in control.”– UnitedHealth: The Bearish 1-2 Punch Pressuring Shares, And Why I’m Bullish
Danil Sereda, Rating: Buy: “Despite the clear risks of a further correction, I believe the stock price has already absorbed most of the negatives. The forward EPS and revenue growth rates aren’t going to fade, in my view, as long as the updated management team keeps executing on its plans and guidance… I see upside potential of more than 22% from the current stock price.” – UnitedHealth Q4 Earnings Review: The Selloff Looks Overdone After Results
Cyn Research, Rating: Buy: “Times of uncertainty are often the best buying opportunities, as in other scenarios involving more positive sentiment, a lot of future growth is already priced in, increasing the potential downside… The turnaround might take longer than expected but is still one worth betting on.” – UnitedHealth Group: Recovery Might Take Longer, But Contrarians Know What To Do
Jonathan Weber, Rating: Buy: “It is pretty clear that UnitedHealth has problems: there are political headwinds when it comes to Medicare funding, there are steep cost increases, etc. But to me, it is also clear that UNH has opportunities… For risk-averse investors, UNH isn’t a good choice. However, for enterprising investors with a longer-term investment horizon, UnitedHealth is appealing at the current price.” – UnitedHealth: Outlook Makes Shares Plunge
Quad 7 Capital, Rating: Buy: “This was quarter was less than what we expected out of UNH, and the earnings inflection confirmation that we got was weaker than expected. Yes, things are getting better, but not as much improvement as we expected… Long-term, we still see upside. You figure $17.75 in EPS puts shares at a below-market multiple now of 16X.” – UnitedHealth Group: Double Whammy Disaster
The Techie, Rating: Hold: “This pullback should not automatically be viewed as a buying opportunity, as weakness is broad-based across the managed care sector… UNH’s rising medical care ratio is a real fundamental concern. While Optum remains a bright spot and continues to be the strategic asset that differentiates UNH from peers, its strength is no longer enough to fully offset pressure in the insurance business.” – UnitedHealth Group Stock Is Not Attractive Yet: Caution Is Warranted
Julia Ostian, Rating: Buy: “Losing such a massive amount of market cap for a powerhouse like UnitedHealth looks like a major, major overreaction to me… Just like the dip we saw in August, I expect a rebound once the market realizes that UnitedHealth is fine, so I even consider adding more on this drop.” – UnitedHealth Group: I Might Add On This Massive Overreaction
Edmund Ingham, Rating: Hold: “At this point—and I would note it remains early days and the shock factor may have driven the stock down further than is truly warranted—I don’t anticipate a fast recovery for the share price of Humana or UnitedHealth… The only sensible decision an investor can make today is to hold onto stock and monitor developments.” – UnitedHealth, Humana: CMS’ Rate Decision Has Crushed Them, And There’s No Quick Fix
What Do the Quant Ratings Say?
UnitedHealth currently carries a Hold rating from Seeking Alpha’s quant system. The company continues to demonstrate strong profitability, earning an A+ grade, with a net income margin of 4% that significantly exceeds the sector median of 0.5%. Valuation also scores well at B+, helped by the a sell-off in the stock that now sees it down almost 50% over the past year.
However, growth metrics present significant concerns, receiving an F grade. Forward EBITDA growth stands at -8% compared to the sector’s 8%, while forward EPS growth of -11% trails the sector average of 13%. Momentum also remains weak at D+, with one-year price performance of -34% underperforming the sector’s -4%. Earnings revisions present a mixed picture at B-, with 19 upward EPS revisions offset by 6 downward revisions.
What Is UnitedHealth?
The Basics: UnitedHealth Group Incorporated, founded in 1974 and headquartered in Eden Prairie, Minnesota, is a diversified healthcare and well-being company operating globally. The company is organized into two complementary businesses: UnitedHealthcare, which offers health benefit plans and services for individuals, employers, and government programs, including Medicare and Medicaid; and Optum, an information and technology-enabled health services business operating through Optum Health, Optum Insight, and Optum Rx segments.
Competitive Landscape: UnitedHealth faces competition from several major players in the healthcare and insurance industry, including Humana Inc. and Elevance Health Inc. The company holds the largest position in the Medicare Advantage market with approximately 29% of all enrollees, serving roughly 9.9 million members. However, the industry faces significant regulatory challenges, with CMS reimbursement rates emerging as a key pressure point and rising medical cost trends threatening profitability across the managed care sector.