UnitedHealth Group's (UNH) 2026 outlook remains steady though a disappointing Medicare Advantage rate notice has added uncertainty around margin and earnings growth, Morgan Stanley said in a Wednesday note.
The firm said UnitedHealth's results and initial 2026 guidance were broadly in line with expectations.
Morgan Stanley flagged management's "clear disappointment" with the recent Medicare Advantage advance rate notice, which it said does not adequately reflect higher medical cost trends.
Further benefit reductions and footprint adjustments are likely in 2027 if final rates remain unchanged, analysts noted.
Morgan Stanley also highlighted progress at Optum Health noting management outlined structural changes implemented in 2025 to stabilize the business.
Morgan Stanley maintained its overweight rating on UnitedHealth and lowered its price target to $375 from $409.
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