UnitedHealth Group Incorporated (UNH): A Bull Case Theory

We came across a bullish thesis on UnitedHealth Group Incorporated on Stock Analysis Compilation’s Substack. In this article, we will summarize the bulls’ thesis on UNH. UnitedHealth Group Incorporated’s share was trading at $278.58 as of July 24^th. UNH’s trailing and forward P/E were 12.24 and 12.94, respectively according to Yahoo Finance.

UnitedHealth Group (UNH) presents a favorable risk-reward profile despite near-term EPS headwinds from rising utilization costs, underpinned by resilient earnings growth potential and a valuation floor that supports a $290–$375 price range. The company’s Q1 downgrade reflected a $1.5 billion operating income cut at UnitedHealthcare (UHC), largely driven by group Medicare Advantage (MA) utilization trends, which have since accelerated and broadened across other MA populations.

Extrapolating these trends, a similar scenario for non-group MA members could further pressure UHC’s operating income by approximately $4 billion, potentially impacting Optum as well due to intercompany transactions. OptumHealth had already absorbed a $3.3 billion cut, and while the May update suggested no material deterioration, spillover from UHC could increase medical costs by an additional $1 billion.

Together, these factors imply a potential $5 billion incremental medical cost headwind, equating to an EPS reduction of about $4 per share, placing 2025 EPS at $22.0–$22.5 — slightly above the latest consensus of $21.9. While guidance may be reset to a more conservative sub-$20 EPS in Q2, management maintains a 13–16% long-term EPS growth target, expecting a return to ~10% growth by 2026, implying EPS of $24.0–$25.0.

Given that UNH’s premium valuation multiple has eroded, a 12x forward P/E appears to be a defensible floor. Applying a 12–15x multiple to 2026 EPS supports a $290–$375 valuation range, offering limited downside, meaningful upside potential, and portfolio diversification benefits, making UNH an attractive opportunity for investors positioned for recovery.

Previously we covered a bullish thesis on UnitedHealth Group Incorporated (UNH) by FluentInQuality in May 2025, which highlighted its scale in Medicare Advantage, vertical integration through Optum, and strong secular healthcare growth. The stock has depreciated about 6% since, driven by utilization pressures. The thesis remains valid given UNH’s structural strengths. Stock Analysis Compilation shares a similar view but stresses the valuation floor and EPS recovery.

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Disclosure: None.