Wall Street upgrades lift UnitedHealth amid easing costs, AI

UnitedHealth Group shares climbed more than 5% on Thursday after Bank of America upgraded the stock to Buy and raised its price target to $450. Morgan Stanley raised its target to $453 and kept an Overweight rating. The shares reached about $396, snapping a five-day slide and extending their year-to-date gain to roughly 20%.

Bank of America analyst Kevin Fischbeck cited improving medical-cost trends and “supportive near-term data points,” writing that incoming data make it harder to view UnitedHealth’s strong first quarter as solely the result of weak flu and weather. The firm raised its 2026 adjusted earnings estimate to $18.70 from $18.60 and estimated the company’s earnings power is roughly 50% above UnitedHealth’s own 2026 outlook if utilization trends moderate.

Morgan Stanley’s Erin Wright pointed to signs of moderating utilization and highlighted artificial intelligence as a potential earnings driver. UnitedHealth plans to invest $1.5 billion in AI this year and projects a conservative two-to-one return on that spending. Morgan Stanley raised its price target from $395 to $453 while maintaining an Overweight recommendation.

The analyst notes supported gains across the healthcare sector. The State Street Health Care Select Sector SPDR ETF rose 3.2%, its largest single-day percentage increase in more than a year. Markets had been mixed earlier in the session before the stock’s advance.

UnitedHealth has been reshaping its operations, trimming membership in some areas, selling the U.K. arm of its Optum health-care delivery business and increasing technology spending. The company reported disappointing April results, lowered its outlook, withdrew guidance in May and announced that Chief Executive Andrew Witty would resign for “personal reasons.”

The upgrades arrive as UnitedHealth prepares to report second-quarter results. Analysts that raised targets and estimates cited moderating medical costs and potential efficiency gains from technology investments as the basis for their revisions.