RBC Capital Adjusts Price Target on UnitedHealth to $498 From $478, Keeps Outperform Rating

UnitedHealthcare and Humana are discontinuing Medicare Advantage plans covering nearly 1 million members, withdrawing from less profitable markets. UnitedHealthcare is ending plans for 390,000 members, while Humana is cutting 600,000. Both companies are focusing on more profitable products and regions, according to reports. Rising medical costs are driving these changes, with insurers reducing flexible PPO plans and increasing out-of-pocket expenses for members.

US stock index futures rose on Wednesday, with tech stocks expected to lead gains. SpaceX (SPCX) shares surged 8.8% after beating earnings estimates, while Super Micro Computer (SMCI) gained 12.2% on raised revenue outlook. Netflix (NFLX) fell 6.8% and AT&T (T) dropped 5% despite strong earnings. Investors await results from Tesla (TSLA), Meta (META), and IBM (IBM). Dow, S&P 500, and Nasdaq showed mixed performance on Tuesday.

UnitedHealth Group reported Q3 net income of $4.3B on $112.7B revenue, with commercial health coverage revenue up 0.9%. CEO Tim Noel noted higher-than-expected medical cost increases, citing specialty drugs, clinician costs, and the No Surprises Act. Enrollment fell 3.6% YoY, with Medicare and Medicaid plans seeing significant declines. Despite rising costs, sales for large employer plans remain strong, according to new CEO Brandon Cuevas.

RBC Capital maintained an Outperform rating for UnitedHealth Group (UNH) and raised its price target to $498 from $478. GuruFocus values UNH at $522.68, suggesting a 20.9% undervaluation. UNH has a GF Score of 84/100, indicating strong performance. The company has a market cap of $371.17 billion and operates in healthcare benefits and services.

UnitedHealth Group (UNH) trades at a premium valuation, with investors expecting profit recovery. The company raised its 2026 guidance but warned of rising medical costs, citing high-cost drugs and the No Surprises Act. A 1% increase in medical costs could cost UNH $3.45 billion. The company's free cash flow and operating income provide some cushion against these costs. Investors should monitor the medical care ratio in future reports.

UnitedHealth Group (UNH) reported Q3 revenue of $112.7B, down YoY but above estimates, with adjusted EPS of $4.69. The company raised its full-year EPS guidance to at least $20.50. UNH stock is up 22% in 2026, trading at a forward P/E of 16, lower than the S&P 500 average. The company has been improving efficiency and investing in AI.