UnitedHealth's Moment of Truth: 3 Bullish Signals to Watch For

UnitedHealth Group (NYSE: UNH) has staged a formidable comeback, with its stock up over 29% in the last 90 days as investors embraced management's aggressive turnaround strategy. This powerful rally has built high expectations, and the market now looks to UnitedHealth Group’s third-quarter earnings report on Oct. 28 for the proof needed to sustain the momentum.

This report is widely anticipated to provide the first hard data confirming the company's recovery, potentially shifting the narrative from a plan on paper to a proven success in action. For investors, the release will center on three key bullish signals that need to be watched.

Signal #1: The Most Important Number in the Report

The primary headwind that has pressured UnitedHealth’s stock price in 2025 was a surge in medical costs that squeezed profit margins. Because of this, the most critical metric investors will scrutinize is the Medical Care Ratio (MCR).

This ratio measures how many cents of every premium dollar are spent on medical care; a lower number is better for profitability.

After a difficult second-quarter 2025 earnings report, management forecast a full-year MCR of around 89.25%, a historically high figure that signaled significant pressure. A sequential improvement in the Q3 MCR would be the single most powerful evidence that the company’s cost-containment strategies, operational discipline, and pricing adjustments are finally taming inflation. 

Given UnitedHealth's massive scale, even small changes in the MCR have a considerable impact. With quarterly revenues exceeding $110 billion, a mere 1% improvement in the MCR can translate to over a billion dollars flowing back to the bottom line.

A better-than-expected MCR would confirm that the core insurance business is stabilizing, directly addressing the market's most significant concern and providing a solid foundation for the stock's continued recovery.

Signal #2: Optum’s Execution: The AI Advantage Comes Into Focus

Beyond the core insurance metrics, a strong report will showcase progress in the operational overhaul at UnitedHealth's high-growth Optum segment. Investors will be listening for positive commentary on the plan to achieve nearly $1 billion in cost reductions in 2026 and to make progress toward the new long-term operating margin target of 6-8% for its OptumHealth division.

This division houses the company's clinics and value-based care models, and its recovery is essential to the long-term growth thesis.

Adding another layer to the story is the recent positive news surrounding UnitedHealth’s new artificial intelligence (AI) powered claims system. This technology, developed within Optum, is designed to streamline the often-frustrating prior authorization process, speed up approvals, and reduce claim denials. 

For investors, this represents a powerful dual narrative. While the core insurance business is being stabilized through financial discipline, Optum is simultaneously deploying cutting-edge technology to create new efficiencies.

This isn't just about saving money; it's a strategic move to strengthen relationships with healthcare providers. It serves as a key competitive advantage that introduces a high-tech growth element to the recovery story.

Signal #3: Raising the Bar for the Year Ahead

Perhaps the ultimate sign of management’s confidence will be its financial forecast for the rest of the year. UnitedHealth's current full-year 2025 guidance is for adjusted earnings of at least $16.00 per share. This figure was established as a floor during a period of peak uncertainty, designed to calm the market rather than inspire it.

A strong third-quarter performance provides the perfect opportunity for management to replace that floor with a new, higher ceiling. Raising the guidance to a more specific and higher range would be a definitive statement of confidence.

It would signal that the recovery is happening faster than previously expected and that leadership has strong visibility into its performance for the remainder of the year. Such a move would almost certainly fuel a fresh wave of positive analyst revisions and solidify bullish investor sentiment.

Valuation and Validation Align: The Next Leg Up

UnitedHealth is positioned for a strong finish to the year, with its upcoming earnings report poised to validate the strategic actions taken by its leadership. This bullish setup is reinforced by external factors, including a cascade of recent analyst price target upgrades from firms like Jefferies and JPMorgan, with some targets now exceeding $425 per share.

Furthermore, a 7.4% decline in short interest shows that bearish bets against the stock are fading fast.

Even after its impressive rally, the stock’s valuation remains attractive. Both metrics stand below the company's historical averages with a forward price-to-earnings ratio (P/E) of 12.33 and a price-to-sales ratio (P/S) of 0.78.

A positive earnings report on Oct. 28 would confirm that this healthcare sector leader is officially back on track, solidifying the case for further upside.

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "UnitedHealth's Moment of Truth: 3 Bullish Signals to Watch For" first appeared on MarketBeat.