UnitedHealth Group's (UNH) sentiment from investors is poised to keep improving, supported by a disciplined reset of Medicare Advantage benefits and its margin improvement plan, Morgan Stanley said in a Friday note.
The company's messaging at a September conference and preliminary clarity for 2026 have helped investors to become more positive on the stock in H2, Morgan Stanley analysts said. The analysts' modeling supports UnitedHealth's plan to cut Medicare Advantage membership by about 1 million members in exchange for profitability, which is a key component to its "turnaround story," they said.
The analysts said they are largely in line with consensus estimates for Q4 results, expecting adjusted EPS $2.08, compared with the consensus of $2.12, which they said is "beatable." They noted the potential for the company to raise its 2026 earnings guidance slightly above the baseline of around 8% growth year-over-year, which implies EPS above $17.55, compared with the consensus of $17.58.
UnitedHealth successfully executing its plans in the next few quarters would allow the company to return to its old pattern of regularly beating consensus and raising guidance, Morgan Stanley said.
UnitedHealth is scheduled to report Q4 earnings on Tuesday before market open.
Morgan Stanley reiterated the company's stock rating at overweight and adjusted its price target to $409 from $411.
Price: 355.24, Change: +0.77, Percent Change: +0.22
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