Some might view UnitedHealth Group (UNH 0.48%) as a stock and a company in retreat. UnitedHealth's shares have plunged more than 40% below the high set in the fourth quarter of 2024. The health insurance stock is down almost 30% year to date.
UnitedHealth Group also recently announced that it is exiting over 100 Medicare Advantage plans. Up to 180,000 beneficiaries in 16 states will no longer have access to these plans.
Where is UnitedHealth Group stock headed after dramatically scaling back its Medicare Advantage plans? Here's my prediction.
NYSE: UNH
Key Data Points
Know when to fold 'em
Let me first address UnitedHealth's decision regarding Medicare Advantage. I'm reminded of an old song recorded by the late Kenny Rogers called "The Gambler." Rogers sang about an old professional gambler who imparted wisdom to a younger man. The chorus included the lyrics, "You've got to know when to hold 'em, know when to fold 'em. Know when to walk away. And know when to run."
Applying this poker analogy, I think UnitedHealth knows that the smartest move right now is to fold its cards with respect to these Medicare Advantage plans. When it's too difficult to make money in a market, exiting that market makes sense.
Much of the company's current woes stem from its Medicare Advantage business. UnitedHealth Group suspended its full-year guidance and replaced its CEO earlier this year in large part because of higher-than-expected medical costs with its Medicare Advantage plans.
Importantly, though, UnitedHealth isn't running away from Medicare Advantage. The company's plans will still be available next year to around 94% of all beneficiaries eligible for Medicare. UnitedHealth should also remain the largest Medicare Advantage carrier based on total enrollment.
Image source: Getty Images.
Where UnitedHealth Group stock is headed
I predict that UnitedHealth Group stock is headed up. By how much is hard to say. However, I think shares could trade at over $400 by this time next year and will likely top $500 within the next three years. If I'm right, UnitedHealth's upside potential is in the ballpark of 36% or more by 2028.
Exiting those 100-plus Medicare Advantage plans is a key ingredient in UnitedHealth's rebound, in my view. So is raising health insurance premiums for the plans the company will continue to offer, not just with Medicare Advantage but also with Medicare Supplement and Part D plans. These are necessary steps for UnitedHealth to improve its bottom line.
I also expect that UnitedHealth Group will right the ship with its Optum business. Optum Health is focused on creating better value-based care products. OptumInsight plans to step up its innovation as it fully recovers from the 2024 cyberattack on Change Healthcare. OptumRx is correcting some issues with a couple of its ancillary businesses.
I'm not the only one who is bullish about UnitedHealth Group. Warren Buffett initiated a significant position in the stock in the second quarter of 2025. So did billionaire David Tepper: UnitedHealth now ranks as the second-largest holding for his Appaloosa hedge fund.
Wall Street is on the UnitedHealth bandwagon, too. Of the 27 analysts surveyed by S&P Global (SPGI +0.50%) in October who cover the stock, 19 rated it as a "buy" or "strong buy." One of these analysts, Jefferies (JEF 0.11%), recently raised its 12-month price target for UnitedHealth from $317 to $409.
The biggest unknown
I'm never completely confident in any prediction that I made because I realize there are always factors that could get in the way. Probably the biggest unknown with UnitedHealth Group is the potential fallout from the ongoing U.S. Department of Justice investigation into its Medicare operations.
My best guess is that this investigation won't ultimately present a major problem for UnitedHealth. The company emerged from a lengthy previous DOJ investigation with a court-appointed Special Master determining that there was no evidence to support allegations of wrongdoing. If the outcome of the current investigation isn't as positive, though, it could weigh on UnitedHealth Group's shares more than I expect.
