Following Tuesday's sharp 20% drop, Cantor Fitzgerald analysts labeled the decline in UnitedHealth Group, Inc. (NYSE:UNH) shares as a buying opportunity.
UnitedHealth stock plummeted following a disappointing 2027 Medicare Advantage Advance Notice and a fourth quarter earnings report that met profit expectations, but signaled a rare revenue decline for the coming year.
Why Cantor Remains Bullish
Despite the heavy selling, Cantor maintained its Overweight rating and $440 price target on UnitedHealth Group, even as other analysts lowered price targets across the board.
The firm's bullish conviction is rooted in several key factors:
- Managed Rate Pressures: Cantor attributed over half of Tuesday's sell-off to the 2027 Medicare Advantage rate notice. The firm sees UnitedHealth mitigating unfavorable rates through strategic pricing and margin-focused bids.
- 2026 EPS Clarity: While an “overnight recovery” is unlikely, Cantor expects sentiment to rebound as investors gain confidence in 2026 EPS guidance. UnitedHeath Group projected a 2026E adjusted EPS of $17.86, driven by margin expansion across several segments.
- UHC Margin Tailwinds: Cantor estimated that UnitedHealthcare margin progression will contribute 86 cents to the EPS bridge, led by a recovery in Commercial margins and steady growth in Medicare Advantage margins.
- Optum’s Strategic Foundation: The analysts are optimistic about a “back to basics” approach in Optum Health, which is expected to contribute 24 cents to the 2026 EPS bridge.
Valuation and Outlook
Cantor's Overweight rating and $440 price target reflect a belief in UnitedHealth Group's structural resilience. While challenges like high medical costs and regulatory scrutiny persist, Cantor views the current price as an attractive entry point for a stock they expect to pay off throughout 2026.
UNH Price Action: UnitedHealth Group shares made a slight recovery on Wednesday, gaining 3.86% to trade at $293.62 at the time of publication.
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