"Raymond James sees the setup as favorable because management has already done the hard work of resetting expectations. The company is deliberately exiting unprofitable contracts, reducing membership by 2.3 to 2.8 million, and guiding toward operating earnings exceeding $24 billion with a 5.5% operating margin in 2026."
"The Optum Health restructuring is the core of the upgrade thesis. Management guided for operating earnings growth of approximately 9% and margin expansion of approximately 30 basis points at Optum Health in 2026."
"The stock has suffered over the past year, pressured by elevated medical costs, CMS funding reductions, and legal scrutiny. But 2026 guidance points to a significant recovery potential."
Raymond James upgraded UnitedHealth Group to Outperform from Market Perform, setting a $330 price target. The firm believes expense upside is greater than expected, particularly with margin improvement at Optum Health. UnitedHealth shares have declined over 48% in the past year. Management is exiting unprofitable contracts and guiding for significant operating earnings growth. The Optum Health restructuring is central to the upgrade, with expected margin expansion. The company operates through UnitedHealthcare and Optum, with a market cap of approximately $245.6 billion and an annual dividend yield near 3%.
Read at 24/7 Wall St.
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