Image Source: Pixabay

Key Takeaways

• UnitedHealth stock has fallen down 36%-50% from its peak, but Bernstein analyst Lance Wilkes names it his “top healthcare pick for 2026,” with a $444 price target
• The company has faced multiple challenges, including a cyberattack on Change Healthcare affecting 190 million people, CEO Brian Thompson’s death, and soaring medical costs
• Management is implementing strong pricing increases for 2026, narrower networks, and beefed-up clinical policy auditing to address cost issues
• Wall Street maintains a Strong Buy consensus, with an average price target showing 18.95% upside potential
• UnitedHealth offers a 3.4% dividend yield, while analysts project a return to earnings growth in 2026

UnitedHealth stock (UNH) has certainly taken a beating over the past year. The shares have fallen down roughly 36% to 50%, depending on the measurement period.
 

(Click on image to enlarge)

Image Source: KnockoutStocks

However, one analyst sees a recovery on the horizon. Bernstein’s Lance Wilkes recently named UnitedHealth his “top healthcare pick for 2026.” Wilkes maintained his Outperform rating on the stock. He set a $444 price target, which represents about 33% upside from recent levels.

The company has faced quite a rough stretch. Change Healthcare, a UnitedHealth subsidiary, suffered a cyberattack early last year that affected 190 million people. Then, in December 2024, Brian Thompson, CEO of the UnitedHealthcare unit, was killed. The company also announced the unexpected departure of former CEO Andrew Witty in May.

Medical costs became a major problem, too. Care activity accelerated faster than expected, while Medicare Advantage plans saw costs spike beyond projections. UnitedHealth suspended its full-year guidance after first-quarter results missed expectations. The company didn’t have a clear picture of the cost situation at the time.

Additionally, the Wall Street Journal reported in May that the Department of Justice had opened a criminal investigation into UnitedHealth. The company later confirmed the probe in July but expressed full confidence in its practices.

Pricing Power and Cost Controls Take Center Stage

Management is taking action to turn things around. UnitedHealthcare CEO Tim Noel said the unit is implementing “strongly responsive pricing for 2026.” Premium increases will be hefty enough to more than offset higher medical costs. The company is also tightening its clinical policy auditing process.

UnitedHealthcare is shifting to narrower networks, particularly for Medicare Advantage plans. AI tools are being scaled up to help control costs.

The Optum business is making similar moves. Optum CEO Patrick Conway said rates are increasing to reflect higher risk profiles and patient acuity. Optum is also exercising what Conway called “operating cost discipline” to reduce expenses. These changes across both major units should help margins recover from recent lows.

Wall Street Sees Value After the Selloff

Wilkes believes the health insurance sector is nearing a turning point. He expects margins in Medicare Advantage and Medicaid to recover from their recent lows.

Bernstein sees UnitedHealth exiting unprofitable businesses to lift overall margins. As these changes take hold, earnings growth should pick up. The firm also highlighted UnitedHealth’s flexibility. If policy pressure rises, the company could separate its UnitedHealthcare and Optum units. Such a move isn’t expected soon. But it could help limit downside risk if needed.

Optum is viewed as a long-term growth driver. Value-based care, AI tools, and specialty pharmacy services support this outlook. Wilkes said UnitedHealth’s valuation looks reasonably attractive compared with expected earnings growth. The stock trades at a discount after the selloff.

Of 26 analysts surveyed by LSEG in August, 19 rated UnitedHealth as a buy or strong buy. The consensus 12-month price target shows 25% upside potential. Wall Street has a Strong Buy consensus rating overall. The average price target of $397.82 indicates 18.95% upside potential.

UnitedHealth offers a 3.4% dividend yield while investors wait for the recovery. Management projects a return to growth in 2026 based on the pricing and cost actions already underway.

The DOJ investigation remains an open question. However, a previous decade-long DOJ probe of UnitedHealth’s Medicare Advantage business found no evidence of wrongdoing after review by a court-appointed Special Master.

More By This Author: