UnitedHealth Earnings: Despite Ongoing Challenges, 2025 Outlook Raised from a Low Hurdle

Key Morningstar Metrics for UnitedHealth Group

• Fair Value Estimate: $427.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

What We Thought of UnitedHealth Group’s Earnings

UnitedHealth Group UNH turned in third-quarter results that were slightly higher than consensus on the bottom line, despite the 59% adjusted EPS decline year over year on 12% revenue growth. Management also increased its adjusted EPS guidance by $0.25 to at least $16.25 in 2025.

Why it matters: Shares initially rose about 4% in pre-market trading before reversing to flat territory. Overall, though, we recognize the stability that this solid report and mildly higher outlook have brought to an organization that has experienced anything but stability over the past year. Initial guidance beyond 2025 looks solid too.

• Specifically, management gave its initial outlook for 2026, stating that consensus looks like a good stepping-off point for profits next year. Our current 2026 expectation appears slightly higher than consensus, representing growth of 9% from the raised 2025 assumptions.
• After some investments in its OptumHealth (caregiving) and OptumInsight (IT solutions) in 2026, management also highlighted that profit growth may accelerate in 2027, which looks in line with our view, too, despite challenges in Medicaid expected that year.

The bottom line: Considering the firm’s slightly higher near-term profit growth trajectory and stronger free cash flow trends in 2025 than we previously expected, we are increasing our fair value estimate to $427 per share from $400 previously.

• Shares still look about fairly valued to us, considering the high uncertainty surrounding cash flows, primarily due to potential regulatory pressures. We remain particularly concerned about potential risk-related adjustments that could reduce the attractiveness of the Medicare Advantage market in the long run.
• Our narrow moat rating on UnitedHealth has not changed, and UnitedHealth looks likely to remain a top-tier managed care organization on an economic profitability basis, with significant margin for executional error like we are seeing in 2025.