UNH

This piece reflects on a year of significant transformation for UnitedHealth Group and outlines the company's strategy for margin recovery. The author examines the challenges faced and the steps being taken to improve profitability and drive future growth.

UnitedHealth Group is downgraded to a 'Hold' rating. The recommendation is to avoid new positions due to regulatory uncertainty from CMS's flat payment proposals for 2027, which, combined with rising medical costs, are squeezing margins. The company is guiding for a revenue drop and membership contraction in 2026 as it exits unprofitable segments. Despite these headwinds, the stock has strong valuation support with a ~4.5% FCF yield.

UnitedHealth Group is downgraded to a 'Hold' rating. The recommendation is to avoid new positions due to regulatory uncertainty from CMS's flat payment proposals for 2027, which, combined with rising medical costs, are squeezing margins. The company is guiding for a revenue drop and membership contraction in 2026 as it exits unprofitable segments. Despite these headwinds, the stock has strong valuation support with a ~4.5% FCF yield.