TD Cowen cuts UnitedHealth stock price target to $402 on 2027 outlook

TD Cowen has lowered its price target for UnitedHealth Group (UNH) stock to $402 from $430, while keeping a Hold rating. The company's shares are currently trading at $370.95, which is below the new target. InvestingPro data indicates that UnitedHealth is significantly undervalued, with a Fair Value of $441 and being one of the most undervalued stocks in the healthcare sector.

The firm expects UnitedHealth to achieve a third-quarter 2026 medical loss ratio of 89.9%, despite commercial risk pressure linked to IDR. The consensus earnings per share (EPS) of $4.12 is generally in line with the company's expectations of around 70%. UnitedHealth has highlighted strong second-quarter momentum and the ongoing durability of medical cost trends in the third quarter.

The company's Medicare Advantage and Medicaid businesses are performing well, with Medicare Advantage near the 2% to 4% target margin range and Medicaid results developing as expected. UnitedHealth, a major player in the Healthcare Providers & Services industry with a $333 billion market cap, is scheduled to report earnings on October 13.

The firm anticipates providing 2027 EPS guidance soon, with current consensus EPS for 2027 up 14% year-over-year. TD Cowen expects UnitedHealth to retain 68% of its members in 4-star or higher contracts by 2027, down from 80% in 2027, following the release of Stars ratings on October 8, 2026. The firm estimates a $13 per member per month headwind in 2028, which could negatively impact revenue by $1.5 billion.

Humana received a positive assessment from Evercore regarding the 2027 Medicare Star Ratings, as the company's largest plan regained its 4-star rating, indicating that 93% of Humana's membership is now in 4-star or higher plans. UnitedHealth Group has been receiving multiple analyst updates, with Piper Sandler and Cantor Fitzgerald maintaining their Overweight ratings, citing optimistic views on the 2027 Stars ratings and pricing outlook.