TLDR
- UNH stock broke above $315 resistance level, targeting $380 by Q1 2026
- Morgan Stanley sees Medicare Advantage margins rising from 2.0-2.5% to 2.5-3.0% in 2026
- 78% of Medicare members could be in 4+ Star plans by 2026, up from 71%
- Stock down 37% year-to-date but gained 4% over past three months
- Wall Street consensus: Strong Buy with 17 Buy ratings
UnitedHealth Group stock is showing technical strength after breaking above a key resistance level at $315 on Tuesday. The healthcare giant closed at $347.92, marking a decisive move above what chartists identify as a bullish inverse head-and-shoulders neckline.
This breakout could trigger a measured move to $380, potentially reachable by the first quarter of 2026. The stock remains about 50% below its 52-week high near $600, but technical patterns suggest momentum may be shifting.
The chart shows an island reversal pattern formed by a 12% gap-up on August 15, following an 11% gap-down on May 15. This combination of pattern breakouts and bullish price gaps indicates potential upside momentum.
Morgan Stanley Analyst Bullish on Recovery
Morgan Stanley analyst Erin Wright maintains an Overweight rating with a $325 price target following recent management discussions. Wright expressed increased confidence in UnitedHealth’s turnaround story, citing management’s strong conviction about profit recovery.
The analyst expects Medicare Advantage margins to improve from the current 2.0-2.5% range in 2025 to 2.5-3.0% in 2026. By 2027, margins could potentially reach the top of the company’s 2-4% target range.
Wright believes UnitedHealth can achieve 6-8% pre-tax margins by 2028, supported by stronger Optum Health performance and continued value-based care growth.
Strategic Plan Exits Support Margin Expansion
UnitedHealth plans to exit certain markets, affecting approximately 600,000 members. While this appears negative on the surface, management expects fewer members to remain with the company compared to historical patterns.
Wright views these exits positively as they allow UnitedHealth to focus on more profitable plans. This strategic shift should help margin improvement beginning in 2026.
The Medicare Star Ratings outlook provides additional support. About 78% of Medicare Advantage members could be in 4-Star or higher plans in 2026, up from 71% currently.
Higher star ratings typically result in better reimbursement rates and improved profitability. This gives UnitedHealth better visibility on its profit recovery timeline.
UnitedHealth stock has gained 4% over the past three months as the broader market rally extends beyond technology into healthcare. The stock trades with a Strong Buy consensus rating based on 17 Buy recommendations, two Holds, and one Sell.
The average Wall Street price target stands at $322.28. Wright ranks 274 out of over 10,018 analysts tracked by TipRanks with a 64% success rate and 13.10% average return per rating.
Despite the year-to-date decline of 37%, recent technical developments and improving fundamental outlook suggest UnitedHealth may be positioning for recovery.
