Shares of UnitedHealth Group (NYSE:UNH) are falling on Tuesday after the company reported fourth-quarter results, but an analyst says the company's guidance shows things are on the right track.
The UNH Stock Analyst
Goldman Sachs analyst Scott Fidel maintained a Buy rating on UnitedHealth Group with a price target of $421.
Goldman Sachs on UNH Stock
Fidel told investors that UnitedHealth's fourth-quarter earnings per share were in line and new guidance for 2026 earnings per share is "on track" in a new investor note.
"The slight EBIT shortfall was driven by weaker Optum Health margins and higher opex spending," Fidel said.
The analyst said fiscal 2026 EPS guidance of $17.75 or more is in line with the Street estimate of $17.76 and slightly lower than the Goldman Sachs estimate of $18.00.
"Optum Health continued to be an area of pressure with adjusted EBIT margin of (0.9%)."
Fidel said the company is seeing continued pressure on Medicare funding reductions.
The analyst remains optimistic about UNH stock based on earnings guidance and room for margin improvement. Fidel highlighted that the company's guidance includes a contraction in Medicare Advantage members, but higher margins.
UnitedHealth is guiding for operating margins of 3.2%, compared to a Street forecast of 3.1%.
Fidel also highlighted the company's Optum segment, with guidance for operating margins of 5.1% compared to the consensus estimate of 4.7%.
"Recovery in this segment representing a key swing factor to overall long-term margin recovery."
UNH Stock Price Action
UnitedHealth stock is down 19.8% to $282.03 on Tuesday versus a 52-week trading range of $234.60 to $606.36. UNH stock is down 48% over the last 52 weeks.
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