Why Raymond James Says Wall Street Is Underestimating UnitedHealth’s Earnings Power

Raymond James upgraded UnitedHealth Group (NYSE:UNH | UNH Price Prediction) to Outperform from Market Perform on Wednesday, setting a $330 price target. The firm argues that expense upside is greater than the Street expects following recent management commentary, with particular attention to margin improvement at Optum Health and potential upside to earnings estimates over the next few years.

With UNH trading near $272 and down 19.22% year-to-date, Raymond James is making a contrarian call at a moment of maximum skepticism. Over the past year, shares of UnitedHealth have lost more than 48%.

The Analyst’s Case

Raymond James sees the setup as favorable because management has already done the hard work of resetting expectations. The company is deliberately exiting unprofitable contracts, reducing membership by 2.3 to 2.8 million, and guiding toward operating earnings exceeding $24 billion with a 5.5% operating margin in 2026. That is a meaningful improvement from 2025’s operating income of $18.96 billion.

The Optum Health restructuring is the core of the upgrade thesis. Management guided for operating earnings growth of approximately 9% and margin expansion of approximately 30 basis points at Optum Health in 2026. Optum leadership confirmed the long-term margin target of 6% to 8% remains intact, with roughly 30% of mature value-based care patients already performing inside that target margin range or above.

Company Snapshot

UnitedHealth operates across two primary platforms: UnitedHealthcare, the insurance arm generating greater than $335 billion in 2026 guided revenue, and Optum, which spans health services, pharmacy benefits, and data analytics. Full-year 2025 revenue reached $447.57 billion. The company carries a market cap of approximately $245.6 billion and pays an annual dividend of $8.73 per share, representing a yield near 3%.

Why the Move Matters Now

The stock has suffered over the past year, pressured by elevated medical costs, CMS funding reductions, and legal scrutiny. But 2026 guidance points to a genuine inflection: Adjusted EPS guidance above $17.75 compares to $16.35 in full-year 2025, and the medical care ratio is expected to improve to 89% plus or minus 50 basis points from 90% in Q3 2025. Raymond James’s $330 target sits below the broader analyst consensus of $358.92, suggesting the firm is taking a measured rather than aggressive stance. The forward P/E of 20x reflects a stock that the market has repriced sharply lower, creating the valuation entry point Raymond James is flagging.

What It Means for Your Portfolio

This analyst upgrade reflects a thesis that the worst of UnitedHealth’s cost cycle is priced in and that Optum margin recovery is underappreciated by consensus. The combination of a growing dividend, conservative 2026 earnings guidance that leaves room for upside, and a stock trading well below its 52-week high of $606.36 is the foundation of Raymond James’s upgrade thesis. The risks are real: CMS RADV audits covering 92% of 2020 Medicare Advantage membership remain an overhang, and the 2027 Medicare rate environment is uncertain. How those risks resolve will determine whether the margin recovery thesis holds.