Dear UnitedHealth Stock Fans, Mark Your Calendars for April 21

Health insurer UnitedHealth (UNH) is due to report its first-quarter financial results later this month on April 21. Although shares of UNH stock have sunk sharply in recent months and an investment bank recently issued a very bullish note on the name, the company continues to face some intense challenges. Analysts on average also predict that the company' earnings per share will fall significantly in the first quarter.

Consequently, investors may want to avoid buying UNH stock at this point. Let's take a closer look.

About UnitedHealth Stock

The largest U.S. health insurer, UnitedHealth has a market capitalization of $277.7 billion and a forward price-to-earnings (P/E) ratio of 17.4 times. In terms of recent performance, UNH stock is down 7% year-to-date (YTD) and down nearly 11% for the past three months.

In the fourth quarter, UnitedHealth's revenue rose 12% year-over-year (YOY) to $113.2 billion. However, EPS retreated to $2.11, down from $6.81 in Q4 2024. On the balance sheet, the company had $24.4 billion of cash and cash equivalents and $72.3 billion of long-term debt.

What Do Analysts Think Ahead of Q1 Results?

On the bottom line, analysts on average predict that the company's EPS will drop to $6.45 in the first quarter from $7.20 in Q1 2025, representing a decline of 10% YOY. That estimated YOY decline in quarterly EPS is certainly quite negative for the outlook of the firm. Additionally, while analysts' mean estimate calls for full-year EPS to climb 8% to $17.66 in fiscal 2026, the experts could become significantly less optimistic as the year progresses. For fiscal 2027, analysts predict earnings growth of nearly 13% YOY to $19.87 per share.

As far as revenue is concerned, the mean estimate calls for sales to increase just 0.25% in Q1 to $109.85 billion. Analysts also predict a decline of 1.3% for fiscal 2026 to revenue of $441.65 billion. Those numbers are bleak.

Despite these estimates, there is some optimism among analysts. Recently, investment bank Raymond James upgraded UNH stock to an “Outperform" rating. However, the firm placed a price target of just $330 on the stock, implying potential upside of just 8% from current levels. Raymond James asserts that UNH stock's recent weakness has created an “attractive entry point,” and believes that UnitedHealth can use AI and other cost-cutting methods to increase its profit margins.

Huge Challenges Ahead for UnitedHealth

UnitedHealth faces some significant challenges, given a few developments around Medicare and the government. 

Earlier this year, I noted that the Centers for Medicare and Medicaid Services (CMS) reported in late January that it would increase payments to private insurers providing Medicare Advantage plans by just 0.09% in 2027. With health spending on the rise, that marginal increase from CMS would likely not have covered the climbing costs that UnitedHealth would have to pay for its customers.

Recently, CMS announced that it has decided to raise Medicare Advantage reimbursement rates by 2.48% in 2027 instead of 0.09%. While this is a great improvement for UnitedHealth, the hike is still way below the 7% increase in healthcare costs seen in 2024. The 2.48% increase will also likely not cover advances in some of UnitedHealth's corporate costs related to Medicare Advantage.

As if this was not enough, the company confirmed in July 2025 that it is being probed by the U.S. Department of Justice. Meanwhile, President Donald Trump and his administration are looking to crack down on health insurers in general.