By Catherine Dunn

UnitedHealth Group's comeback got a serious boost when it scored an earnings beat a couple of weeks ago. Now, it's being added to Goldman Sachs' U.S. Conviction List -- Director's Cut, an acclaimed rundown of Buy-rated stocks.

Goldman likes the healthcare company's plans to get smaller in Medicare Advantage, calling it a "shrink to grow" story.

Medicare Advantage, the federally subsidized health insurance program for seniors, is central to UnitedHealth's business and comprises about 40% of its revenue. But the company stumbled last year, tripped up by rising medical costs and changes to how the government reimburses private insurers.

This year, Goldman notes, UnitedHealth plans to reduce its Medicare Advantage enrollment by 1.3 million members and decrease membership by about 10% in its value-based care Optum Health business, which provides medical services to Medicare plan members.

As profitability in the market bottoms out, analyst Scott Fidel sees a setup for a "sustained positive profit inflection for UNH."

In making that case, Goldman said UnitedHealth's updated pricing for health coverage is now embedded, and healthcare costs are coming in line with company assumptions.

Fidel forecasts a 4% decline in revenue from Medicare Advantage this year but estimates "a 50% increase in MA EBIT" because of UnitedHealth's reset pricing and cost savings, in part from artificial intelligence.

All of that will help drive annual earnings per share growth of more than 15% on average through 2028, according to Goldman Sachs.

"Bottom line, ...UNH represents a high conviction opportunity to own a best in class managed care franchise at the turning point of its earnings cycle," the report says, adding: "a durable, multi year EPS recovery is emerging that is not yet fully appreciated by the market."

Write to Catherine Dunn at catherine.dunn@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 01, 2026 12:29 ET (16:29 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.