UnitedHealth Shares Show Signs of Recovery After a Turbulent Year

Following a punishing 2025 that saw its stock price plummet by approximately 33%, UnitedHealth Group has entered 2026 with a notable uptick. The healthcare behemoth’s shares posted a significant gain on the first trading day of the year, outpacing the broader market indices. This early performance raises the question of whether the company's recently announced strategic shifts can catalyze a sustained reversal.

UnitedHealth’s equity opened the new year with a 1.91% advance, closing at $336.40. This performance handily exceeded the gains of the S&P 500, which rose 0.19%, and the Dow Jones Industrial Average, up 0.66%. This initial bounce follows a severe downturn from an April 2025 peak of $606 per share to a low of $234—a decline of over 60% from that high. The company’s current market capitalization stands at $299 billion.

Operational Headwinds Squeeze Profitability

The scope of UnitedHealth’s challenges was laid bare in its third-quarter 2025 results. While revenue increased by 12% to $113.2 billion, operating income collapsed by 50% to $4.3 billion. Consequently, the net margin contracted sharply from about 6% a year earlier to just 2.1%.

A primary driver of this margin pressure was a deterioration in the Medical Care Ratio, which climbed to 89.9% from 85.2% in the prior-year quarter. Despite these pressures, management raised its full-year adjusted earnings per share guidance to at least $16.25.

A Strategic Overhaul is Underway

In response, the company is implementing a radical realignment. UnitedHealth is enacting substantial price increases across its business segments, including hikes exceeding 25% in its ACA marketplace plans. Concurrently, management is accepting a reduction in its membership base, anticipating a loss of roughly one million members in its Medicare Advantage business.

Within its Optum Health division, the corporation is narrowing its provider network and exiting certain product offerings, affecting approximately 200,000 insured individuals. Membership in its value-based care arrangements is also projected to shrink by around 10%.

Should investors sell immediately? Or is it worth buying Unitedhealth?

An additional headwind for 2026 is an estimated $6 billion impact from V28 Medicare reimbursement cuts. Company leadership expects to offset roughly half of this amount through renegotiations with payers.

Analyst Sentiment Begins to Shift

After the stock’s brutal decline, market experts are starting to identify renewed potential. Wolfe Research recently lifted its price target from $330 to $375, reaffirming its "Outperform" rating. Mizuho was even more bullish, raising its target from $300 to $430.

The consensus view among analysts currently includes 15 "Strong Buy" ratings, two "Moderate Buy" ratings, and seven "Hold" recommendations. Only one analyst advises selling. The average price target sits at $395, implying an upside potential of 17% from recent levels. The most optimistic forecast targets $440, which would represent a 31% gain.

Pivotal Financial Report on the Horizon

All eyes are on January 27, 2026, when UnitedHealth is scheduled to release its full-year 2025 results and provide guidance for the current year. For the fourth quarter, analysts project earnings per share of $2.09, a 69% year-over-year decrease. The consensus estimate for all of 2025 is $16.30 per share, marking a 41% decline.

Management aims for a return to solid profit growth in 2026, with ambitions for sustainable double-digit growth commencing in 2027. While the forward price-to-earnings ratio of approximately 18.75 is above the industry average of 14.01, bullish investors contend that the company’s historical valuation premium remains justified.