Track market-moving stories before they get noisy

The UnitedHealth Group stock price has embarked on a major rally in the past few months and has recently formed the encouraging golden cross pattern. UNH jumped to $420, its highest level since April 25. It has soared by 78% from its lowest level this year. 

UnitedHealth Group, the biggest health insurance company in the United States, is doing well this year. This is a sharp contrast to what happened last year when it became one of the top laggards in Wall Street. 

The stock has rebounded even after Warren Buffett’s Berkshire Hathaway sold all the shares in the first quarter. This rally is mostly because of a change of policy by the Trump administration.

In April, the US administration said that it would boost payments to Medicare Advantage plans next year. It will boost the payments by 2.48% to $13 billion, higher than the 0.09% that the CMS had proposed earlier this year. In a note at the time, a Morningstar analyst said:

"Final rates typically rise from initial rate notices, and we think investors appreciated that pattern remaining intact, despite the ongoing regulatory pressure on this end market.”

In addition to the UNH stock, other similar companies are doing well. CVS Health jumped to $103 on Monday, up sharply from last year’s low of $43.55. While CVS is known for its pharmacies, it is also a big name in the health insurance industry. Humana shares have soared by 135% from its lowest point this year.

The UNH stock price has also soared after the company published strong financial results. These numbers revealed that its revenue soared to $111.72 billion in the first quarter, higher than the expected $109.57. This revenue growth showed that the company was still seeing strong demand during the quarter, a move that will help the new management implement the turnaround.

Its earnings per share (EPS) rose $7.23 beating the analysts estimates of $6.57. Most notably, the company also boosted its forward estimates. It now expects that adjusted earnings will be $18.25 this year, while the annual revenue will soar to $439 billion. 

Analysts, on the other hand, predict that the revenue will jump to over $444 billion this year. These numbers explain why analysts are upbeat about its performance, with Bank of America hiking its target to $475 from the previous $450. Leetink Partners and Mizuho see the stock continuing rising.

UnitedHealth stock chart | Source: TradingView

The daily chart shows that the UnitedHealth Group stock has done well in the past few months. It has soared above the crucial resistance level of $381, the highest point in October last year. It was the neckline of the double-bottom-like pattern at $258. 

The stock has formed a golden cross pattern, which happens when the 50-day and 200-day moving averages cross each other. This pattern normally leads to more upside over time. 

The stock has also remained above the Ichimoku cloud indicator. Therefore, the path of the least resistance is upwards, with the next key target to watch being at $500. 

Shares of UnitedHealth Group (UNH +2.87%) are up 25% this year and are still trading near its 52-week high. The healthcare giant's stock offers a good combination of revenue growth, a solid dividend, and strong insulation against economic downturns.

The company has bounced back significantly after it had a bad earnings miss and suspended guidance in April 2025, a move that was followed by the resignation of then-CEO Andrew Witty.

Here are reasons why the stock remains a good buy.

Image source: Getty Images.

It's a great dividend stock UnitedHealth Group just raised its dividend by 5% to $2.32 per quarterly share, marking 17 consecutive years of raises, and at the stock's current price, it yields around 2.3%.

The dividend increase shows the company is confident in its ability to handle rising medical costs and other changes. The company produced $19.7 billion in operating cash flow in 2025, equal to 1.5x net income. Cash from operations has consistently exceeded net income.

The stock is a solid choice for total-return and income-focused investors. The company generates massive, highly reliable free cash flow that supports aggressive share buybacks, as it expects to repurchase $2 billion in shares by the end of the second quarter and to maintain a consistently growing dividend.

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Two segments balance the business Unlike pure-play health insurers, UnitedHealth Group operates a highly resilient, diversified model split into two powerhouse segments. One is UnitedHealthcare, its huge insurance arm that served 49.1 million people in the first quarter, including individuals, employers, and government programs.

The other is Optum, its health services business that provides pharmacy benefits, data analytics, and direct patient care to more than 123 million people.

In the first quarter, the UnitedHealthcare side was driving its business. The company reported overall revenue of $111.7 billion, up 2% year over year, with UnitedHealthcare reporting $86.3 billion, up 2% from the first quarter of 2025. Earnings per share (EPS) were $6.90, up less than 1% compared to the same period a year ago, and earnings from UnitedHealthcare again were the catalyst, with earnings from operations of $5.7 billion, up 9%, year over year.

It is still selling at an attractive valuation Though UnitedHealth Group's shares have risen more than 25% this year, its shares are still trading at around 31 times earnings and around 22 times future earnings.

The advantage of healthcare stocks is that people need medical care regardless of the state of the economy. Concerns about rising costs combined with no reimbursement raises on the way for 2027 have compressed the company's valuations into reasonable territory compared to its historical averages and put it in a good position compared to its nearest competitors.

It has strong pricing power that reacts to change UnitedHealth Group's medical cost ratio was 83.9% for the first quarter, down 90 basis points from the same period a year ago. That's the good news. The bad news is that medical cost ratios have been increasing for insurers over the past several years, due to changes under the Affordable Care Act, the rising number of older adults seeking medical care, the rising costs of diabetes and weight-loss medications, and medical advancements tied to high-cost medical devices.

UnitedHealth has a clear playbook for managing the recent industrywide spike in medical utilization. Because commercial plans renew continuously throughout the year, management has already begun implementing a strongly responsive pricing strategy. In its Medicare Advantage plans, the company is adjusting premium pricing, streamlining provider networks, and utilizing advanced tools to filter unnecessary clinical costs. That's a key point because UnitedHealth is the largest Medicare Advantage provider, serving more than 8 million people. In April, CMS finalized a 2.48% payment increase for 2027 Medicare Advantage plans, which was more than what was initially proposed, but doesn't solve long-term price concerns, industry executives said.

The company is using AI to trim administrative costs UnitedHealth Group has launched a massive $1.5 billion enterprise-wide artificial intelligence (AI) initiative. By transitioning traditional, fractured processes to AI-first operations, management expects a 2-to-1 return on investment, translating into nearly $1 billion in direct operating-cost reductions.

The company is deploying artificial intelligence across three core operational fronts to aggressively defend and expand its operating margins. It is using generative AI to handle the first point of contact, reducing the need for expensive call center networks.

Launched in March, its digital companion Avery is a generative AI assistant handling inquiries for employers and Medicare Advantage members. It is set up to resolve complex questions about coverage limits, claim status, and copay estimates instantly. By migrating member navigation to self-service AI, UnitedHealth has already reduced call center volume by 25% as of the first quarter, eliminating significant structural overhead.

It is also using AI to simplify and speed up prescription approval times from eight hours to under 30 seconds and considerably drop processing costs. The company sees its AI engine as not only saving money but also, when outsourced, adding revenue.

About a third of UNH's $1.5 billion AI spend is dedicated to transforming OptumInsight into an AI-first software firm. The data analytics, payment integrity, and fraud-detection models trained internally on UNH's massive data pool are being packaged and sold directly to other hospital networks and insurers, turning an internal cost-saver into a high-margin revenue stream.

UnitedHealth says AI is driving 2-to-1 returns and could cut operating costs by almost $1 billion this year. Summary

AI is becoming central to UnitedHealth’s cost-cutting and efficiency push.

UnitedHealth Group UNH is putting artificial intelligence at the center of its turnaround strategy as the company looks to recover from last year's profit collapse. The largest US health insurer plans to invest $3 billion in AI across 2026 and 2027, with executives saying the technology is already generating a 2-to-1 return by automating manual work, improving efficiency, and potentially reducing friction for patients.

The company is using AI across a wide range of administrative tasks, from reading medical chart summaries to nurses on the road, to analyzing millions of customer calls, to testing AI agents that call doctors' offices to schedule appointments. UnitedHealth also expects AI to help reduce operating costs by almost $1 billion this year, while Optum Real, a coverage-checking system for medical providers, has processed about a billion transactions since launching last year.

Wall Street appears focused on the potential cost savings, with Morgan Stanley analysts noting that insurers and medical providers spend $80 billion a year on administrative transactions. Still, UnitedHealth may need to convince a skeptical public that AI will benefit patients, not just the bottom line, as the company faces lawsuits over insurer algorithms and scrutiny after a federal inspector general report linked a naviHealth algorithm to higher denial rates that were almost always overturned on appeal.

Key Takeaways UNH benefits from insurance, care delivery, pharmacy and technology businesses under one platform.UNH is expanding AI initiatives and value-based care efforts to improve efficiency and growth.Humana's Medicare membership and CenterWell revenues rose strongly, but EPS estimates remain pressured. UnitedHealth Group Incorporated (UNH - Free Report) and Humana Inc. (HUM - Free Report) are leading U.S. managed-care and health insurance companies operating in an industry that is navigating higher medical-cost trends, evolving reimbursement policies and changing regulatory requirements. Both companies have significant exposure to the Medicare Advantage market, making them key participants in one of the fastest-growing segments of the healthcare insurance landscape.

While UNH and HUM compete within the same sector and face many of the same industry dynamics, their business models and strategic priorities differ. UnitedHealth benefits from a diversified healthcare platform that spans insurance, health services and care delivery, whereas Humana maintains a greater focus on government-sponsored healthcare programs, particularly Medicare-related offerings. These distinctions influence their growth profiles, profitability trends and overall market positioning.

Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better bet now.

The Case for UNHUnitedHealth's growth is supported by the breadth of its healthcare ecosystem, which combines insurance, pharmacy services, care delivery and healthcare technology under one platform. The company generated total revenues of $111.7 billion, which grew 2% year over year in the first quarter of 2026, benefiting from pricing actions, a favorable member mix and improving operational execution across its businesses.

UnitedHealthcare unit remains a key earnings driver for the company, supported by its leading positions in Medicare Advantage, commercial insurance and government-sponsored programs. Recent pricing actions have improved alignment between premiums and healthcare costs, while a greater focus on affordability initiatives and cost management is helping stabilize margins. The business is also expanding digital engagement, with nearly half of its members now using its digital platform and digital interactions becoming the primary channel for customer service. In the first quarter of 2026, the unit’s revenues rose 1.9% year over year.

Another major contributor to future growth is Optum Health, where the company continues to strengthen its value-based care models. The segment served around 93 million people in first-quarter 2026. Greater care coordination, improved patient navigation and enhanced clinical oversight are helping reduce unnecessary hospital and post-acute care utilization, supporting better health outcomes while improving operating performance.

Technology is becoming another key pillar of UnitedHealth's strategy. The company plans to invest nearly $1.5 billion in AI-related initiatives in 2026 to streamline administrative processes, improve customer experiences and increase productivity across its operations. Meanwhile, Optum Insight is expanding AI-driven solutions for healthcare providers and payers, creating an additional avenue for growth beyond traditional insurance operations.

Alongside these efforts, investments in provider connectivity, automation and streamlined authorization processes are helping improve member experiences, drive operational efficiencies and strengthen the long-term competitiveness of the insurance segment. The company benefits from significant scale and diversification, although persistent medical-cost inflation and regulatory changes could weigh on earnings growth in the near term. UNH beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 0.8%.

Financially, UNH is in a solid position. It ended the first quarter of 2026 with $31.2 billion in cash and short-term investments, sufficient to cover its short-term borrowings and current maturities of long-term debt, which stands at $6.5 billion. Its total debt-to-capital of 40.75% is below HUM’s 42.9% and the industry’s 42.9%. In the first quarter of 2026, it paid dividends worth $2 billion.

The Case for HUMHumana's growth is being driven by continued expansion in its Medicare-focused businesses and the increasing scale of CenterWell, its healthcare services platform. In the first quarter of 2026, total revenues rose 23.5% year over year, supported by strong growth in Medicare Advantage and Medicare Part D membership. Total Medicare membership increased to nearly 11 million members, while Medicare Advantage membership climbed 23% year over year to 7.1 million in the quarter.

CenterWell remains a key strategic growth engine for Humana as the company continues to deepen its presence across primary care, home health and pharmacy services. The segment generated $6.1 billion in revenues in the first quarter of 2026, up nearly 20% from the prior-year period. By strengthening the integration between healthcare services and insurance operations, CenterWell supports member engagement, care coordination and long-term growth opportunities beyond the company's core insurance business.

The company is emphasizing disciplined pricing, benefit optimization and cost-management initiatives to improve Medicare Advantage margins following a period of elevated healthcare utilization. This approach is designed to strengthen earnings quality and support a more sustainable long-term growth profile while maintaining competitiveness in its core markets. It beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 3.8%.

HUM is also investing in data interoperability, digital capabilities and quality-improvement initiatives that support its integrated care model. These efforts are intended to enhance healthcare outcomes, improve operational efficiency and strengthen Star Ratings performance over time, which remains a key driver of reimbursement levels, member retention and long-term profitability. However, competitive pressures and ongoing cost trends remain key factors that could influence earnings and margin recovery in the years ahead.

Nevertheless, as of March 31, 2026, the company had cash and cash equivalents of $5 billion, with short-term debt of $1.7 billion only, which implies a solid capital position. Humana has been returning excess capital to its shareholders in the past several years. It repurchased common shares in connection with employee stock plans for $107 million in the first quarter of 2026. The company also paid dividends of $107 million during the quarter. However, its dividend yield of 1% is below UNH’s 2.3%.

Price Performance ComparisonIn the year-to-date period, HUM shares have outperformed UNH, the industry and the S&P 500.

Price Performance – UNH, HUM, Industry & S&P 500
Image Source: Zacks Investment Research

How Do Estimates Compare for UNH & HUM?The Zacks Consensus Estimate favors UNH at this stage. The consensus estimate for UNH’s 2026 earnings indicates a 12.1% increase from a year ago. Over the past 60 days, the estimate has witnessed 14 upward revisions with no downward adjustments. Meanwhile, the consensus estimate for revenues suggests a 0.9% decline.

On the other hand, the Zacks Consensus Estimate for HUM’s 2026 revenues indicates 25.3% year-over-year growth, but the same for EPS signals a massive 47.4% decline. Over the past 60 days, the estimate has seen three upward revisions with two downward adjustments.

Valuation: UNH vs. HUMFrom a valuation standpoint, UnitedHealth may appear slightly more expensive than the industry at first glance, but it represents its size, operational consistency and business diversification. Humana’s stock currently trades at a higher multiple than UNH. UnitedHealth is currently priced at 20.57X forward 12-month earnings, compared to Humana’s 30.47X, both above the industry average of 17.46X.

Image Source: Zacks Investment Research

UNH currently trades below its average analyst price target of $412.56, implying a 2.9% potential upside from current levels. Meanwhile, HUM trades above its average analyst price target of $300.26, implying a 16.7% potential downside from current levels.

ConclusionBoth UnitedHealth and Humana are leading managed-care companies with strong positions in the Medicare Advantage market. Humana is benefiting from robust membership growth and the expansion of CenterWell, but its earnings recovery remains dependent on improving Medicare Advantage margins and reimbursement dynamics.

UnitedHealth, however, appears to have the edge due to its diversified business model, stronger financial position and broader growth opportunities across insurance, healthcare services and technology. Despite ongoing regulatory and cost-related pressures, its superior earnings growth outlook, attractive valuation and higher dividend yield make UNH the stronger healthcare stock at present, even though both companies currently carry a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.