Piper Sandler defends UnitedHealth stock on Medicare star ratings

Piper Sandler has reaffirmed its Overweight rating for UnitedHealth Group Inc. (NYSE:UNH) after reviewing the Centers for Medicare & Medicaid Services' Medicare 2027 Part C & D Star Ratings. According to the research firm, UnitedHealth holds a 66.8% mix of 4.0+ Star ratings based on September 2026 enrollment data. The analysis encompassed managed care organizations such as Alignment Healthcare, CVS Health, Humana, and UnitedHealth.

Among these, Alignment Healthcare's H3815 contract saw a decline from 4.0 to 3.5 Stars, while Humana's H5216 contract improved from 3.5 to 4.0 Stars. Piper Sandler commends UnitedHealth's resilience in Star Ratings as impressive and underappreciated. The stock is currently trading at roughly 14 times conservative consensus calendar year 2028 adjusted earnings per share estimates, compared to a P/E ratio of 23.84.

InvestingPro analysis suggests the stock is undervalued at its current price of $370.95, with a Fair Value indicating significant upside potential. UnitedHealth boasts a GOOD financial health score and has raised its dividend for 16 consecutive years, currently yielding 2.5%. The firm recommends buying the stock into the third quarter of 2026.

As of after-hours trading, the stock was flat to down. For investors interested in further insights, InvestingPro provides a Pro Research Report on UNH, which is one of 1,400+ US equities covered, simplifying complex Wall Street data into actionable intelligence ahead of the company's earnings report in four days. UnitedHealth Group is scheduled to report earnings on October 13, with options data hinting at a potential stock movement of 5.7% upon the announcement.

Analysts from Cantor Fitzgerald have maintained an Overweight rating on UnitedHealth, with a price target of $495, highlighting favorable pricing and Stars ratings outlooks. Bernstein SocGen Group has increased its price target for UnitedHealth to $512 from $492, also maintaining an Outperform rating, following an improved earnings per share estimate of 6% for 2026 and slight enhancements for 2027 and beyond.

Notably, Bernstein highlighted the potential of UnitedHealth’s Optum Insight, which provides various services to healthcare providers and payers. These updates offer a comprehensive view of UnitedHealth's current status and future prospects, as assessed by industry analysts.