- Earnings Beat: UNH reported Q3 revenue of $113.2 billion (↑12% YOY) and adjusted EPS of $2.92 [1], topping consensus forecasts. Management lifted its 2025 EPS guidance to at least $16.25 (from $16.00) [2] [3]. CEO Stephen Hemsley said the results reflect “solid execution” toward “accelerating growth in 2026 and beyond” [4].
- Stock Reaction: Shares jumped sharply on Oct. 28. Trading was halted twice for volatility as UNH spiked, ultimately climbing ~10% for the day [5]. The stock now trades in the mid-$360s – roughly 50% above its May lows – yet still about 30% below its April peak [6] [7]. Buffett’s Berkshire Hathaway, which bought 5 million UNH shares in August, helped fuel this rebound [8].
- Analyst Upgrades: In recent weeks Wall Street has become more bullish. KeyBanc raised its UNH target to $400 (from $350) and Bernstein to $433 [9], part of a “wave of upgrades” that also included Wells Fargo, Morgan Stanley, Truist and Barclays [10]. By late October the average analyst target was about $404, implying roughly 10–15% upside [11]. However, some warn the stock isn’t cheap yet: Short Hills Capital’s Stephen Weiss said Hemsley is a “ninja” who can fix the company, but “it doesn’t mean that the stock is attractively priced here” [12].
- Year’s Challenge & Turnaround Plan: UNH’s spring earnings shortfall – the first in years – was blamed on a surge in medical-utilization costs. It led to an abrupt CEO change (Stephen Hemsley returned) and a steep guidance cut (down to ~$14.65 EPS for 2025) [13]. Management has since slashed expenses (for example, exiting 100+ underperforming Medicare Advantage plans in 2026 [14]) and refocused on profitable growth. Analysts note its core businesses (UnitedHealthcare and Optum) remain industry leaders. Hemsley has pledged a “rigorous path back to being a high-performing company,” targeting a return to earnings growth by 2026 [15].
UnitedHealth’s third-quarter report released Oct. 28 largely vindicated that turnaround strategy. Revenue climbed 12% year-over-year to $113.2 billion, helped by strong growth in both its insurance (UnitedHealthcare) and health-services (Optum) units [16]. The company delivered adjusted EPS of $2.92, beating the $2.80 Wall Street average [17], despite EPS plunging from $7.15 a year ago due to higher costs. On the call, Hemsley noted that results were on track with management’s plan: “We remain focused on strengthening performance and positioning for durable and accelerating growth in 2026 and beyond,” he said [18]. UnitedHealth also raised its full-year 2025 profit outlook to at least $16.25 per share [19] [20], a modest increase that exceeded analysts’ expectations.
Investors cheered the report. UNH shares popped in early trading – nearly +4% in pre-market and roughly +10% on the day [21] [22] – before settling around the mid-$360s. This continued a rally that began after summer lows; the stock had plunged to about $235 in May but rebounded about 50% by late October [23]. Even with the bounce, however, UNH remains far below its spring 2025 highs (above $630). Trading volume was heavy as hedge funds and mutual funds that bought the dip took profits. Overall, the October 28 move suggests investors are now more confident that UNH’s severe profit weakness is easing.
Wall Street’s analyst community has indeed warmed to UNH. Over the past month multiple brokerages lifted price targets: KeyBanc from $350 to $400 and Bernstein to $433, for example [24]. StockAnalysis.com notes that the 25 analysts covering UNH have an average target of about $404 (roughly 10% above current levels) [25], with a consensus “Buy” rating. Some target estimates are even higher (Mizuho’s $430; JP Morgan’s $425). As TS2.tech observed, these revisions imply “~10–20% upside” if UnitedHealth can control costs [26]. However, not all forecasters are uniform: Steve Weiss of Short Hills Capital praised Hemsley’s return but warned that “fundamentals” don’t yet justify the current price [27].
Behind the optimism is UnitedHealth’s dominant business model. The insurer covers over 50 million Americans and its Optum services (pharmacy and data-driven care) are rapidly expanding. As one investment manager put it, UNH “stands as the premier, category-defining enterprise in the U.S. healthcare sector” [28]. Noted strategist Stephanie Link (Hightower Advisors) expects that its core insurance margins will return to long-term targets “by next year” [29] as the acute cost surge from the post-pandemic backlog recedes. At the same time, James Harlow of Novare Capital urges patience: UNH “needs to get back to its beat-and-raise cadence to earn back investor trust,” since political and regulatory risks (such as probes of Medicare billing) still loom [30].
In short, the market now views UnitedHealth as a turnaround story rather than a collapse. Analysts point out that the worse-than-expected results earlier this year were largely driven by temporary shocks. If utilization normalizes, UNH’s scale could restore its strong profit engine. TS2.tech notes the company is now “a contrarian pick” – an industry leader trading at a steep discount – with many expecting “better days lie ahead” [31]. The latest quarter is evidence of stabilization: for example, UNH’s medical-loss ratio (the percentage of premiums spent on care) came in at 89.9% for Q3, slightly better than analysts had feared [32]. Looking ahead, UnitedHealth’s forecast envisions modest growth in 2026. If costs stay under control, investors hope the stock’s recent surge could extend higher. As one analyst put it, the strong competitive moat and the new CEO’s focus make UNH one of the few “blue-chip” healthcare plays on sale [33] [34].
Sources: UnitedHealth Q3 2025 earnings press release [35]; Reuters/MarketScreener business-wire reports [36] [37] [38]; news analyses from TechStock²/TS2.tech [39] [40] [41] [42] and Economic Times [43] [44]; Insider Monkey interview [45]; and market data aggregator StockAnalysis [46], among others. Each figure and quote is cited with the linked source.
References
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