UnitedHealth (UNH) Sees Modest Target Cut at Morgan Stanley as Outlook Stabilizes

UnitedHealth Group Incorporated (NYSE:UNH) is included among the 12 Best Dow Jones Dividend Stocks to Buy According to Hedge Funds.

On January 26, Morgan Stanley analyst Erin Wright trimmed her price target on UnitedHealth Group Incorporated (NYSE:UNH) to $409 from $411, while keeping an Overweight rating ahead of the Q4 report. The firm said investor mood around the stock is starting to improve, driven by what it called UnitedHealth’s “disciplined” Medicare Advantage benefit reset. Morgan Stanley is looking for a fairly in-line quarter, with room for upside when the company lays out its 2026 guidance.

A day later, the company posted a modest fourth-quarter earnings beat but paired it with weaker-than-expected revenue guidance. The results underscored how difficult the turnaround has been for the parent of the largest private health insurer in the US, especially as medical costs continue to run hotter than expected.

The timing of the report also stood out. UnitedHealth’s results came during a tense period in Minnesota, just days after CEO Stephen Hemsley joined other business leaders in urging calm following the fatal shooting of a U.S. citizen by federal immigration agents. Financially, the quarter was rough. Fourth-quarter profit fell sharply, with net income dropping to $10 million, or $0.01 a share, from $5.54 billion a year earlier. On an adjusted basis, excluding divestitures, restructuring charges, and costs tied to the Change Healthcare cyberattack, earnings came in at $2.11 per share. Revenue still moved higher year over year, reaching $100.81 billion.

Management is now leaning heavily on a refreshed leadership team after two bruising years. The strategy is not flashy. It involves shrinking membership, pushing through price increases, trimming benefits, and improving transparency, all aimed at rebuilding margins and restoring investor confidence.

Looking ahead to 2026, UnitedHealth forecasts revenue above $439 billion. That would be down about 2% from the prior year and well below what Wall Street had been expecting. CFO Wayne DeVeydt said it would be the first revenue decline in a decade, driven by asset sales, exits from international markets, and a projected drop of more than 3 million U.S. members.

DeVeydt said the company has already pulled out of South American and European operations to refocus on its core US business, strengthen the balance sheet, and lay the groundwork for longer-term growth. Another hit is coming from Medicare’s new V28 coding system, which he said will reduce 2026 revenue by roughly $6 billion, split between UnitedHealthcare and the Optum unit.

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