Bank of America Corp (NYSE:BAC) analysts have repeated their ‘Neutral’ rating on UnitedHealth Group Inc (NYSE:UNH, ETR:UNH) after Berkshire Hathaway disclosed a new investment in the health insurer, calling the move a positive signal but not enough to resolve key uncertainties in the near term.
“The question is less 'Is there upside?', and more 'When will it be realized?'" the analysts wrote. “We generally are favorable on UnitedHealth and see the potential for upside in 2027, which would likely lead to upside in the multiple as well.”
The bank raised its price objective to $325 from $290, citing stronger peer multiples, but said the stock’s performance over the next year will hinge on answers to three critical questions.
The first question is whether earnings have been properly reset. UnitedHealth cut guidance to $16 a share for 2025, pointing to “solid, yet modest growth” of $16.80 to $17 in 2026.
Bank of America believes this level “seems like a reasonable rebasing,” though it stressed that the company needs to deliver earnings “the right way: upside on Medical Loss Ratio (MLR).”
The analysts added that UnitedHealth has not delivered a “United-type” quarter in over two years, with recent beats driven by cost controls rather than stronger core performance.
The second question is around the October release of 2027 Star ratings by the Centers for Medicare & Medicaid Services, which will determine the share of UnitedHealth’s Medicare Advantage members eligible for quality bonuses.
“If stars drop meaningfully in 2027, the return to normalized margins would be pushed to 2028 at the earliest, likely leaving the stock in limbo for another year,” the analysts warned.
While UnitedHealth has historically been strong in this area, the analysts wrote that the breadth of recent operational challenges “shows that UnitedHealth hasn’t been managed well for years, leaving the door open for a negative surprise.”
The third question is whether the 2027 Medicare Advantage rate update, expected in February 2026, will introduce a new coding adjustment.
While the 2026 update delivered the highest rate increase in a decade, analysts cautioned that a new coding adjustment could easily wipe out the progress UnitedHealth makes in the coming years. The analysts estimated that the prior adjustment, V28, reduced UnitedHealth’s top line by about $16 billion across Medicare Advantage and Optum.
“We need answers to three questions, and the wrong answer to any one of them means 12 more months of underperformance, leaving us ‘Neutral’ until we get more clarity,” the analysts concluded.
Shares of UnitedHealth traded at $310 on Monday afternoon, down almost 39% in the year to date.