UnitedHealth's Earnings Jumped 60%. Is the Comeback Stock a Buy, Sell, or Hold?

UnitedHealth Group (NYSE: UNH) is showing signs of a comeback after a challenging stretch, with earnings rising sharply in its latest report as its turnaround gains momentum. Still, whether investors should add shares, trim them, or sit tight comes down to one question: Can the company continue with its earnings recovery?

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UnitedHealth's earnings rebound is gaining momentum

In the third quarter of 2026, adjusted earnings per share climbed around 61% from a year earlier, beating Wall Street expectations. Revenue also came in ahead of forecasts, while management raised its full-year adjusted earnings guidance to at least $20.50 per share. That's an improvement from its previous forecast of $19.50 to $20.00.

The encouraging part is that UnitedHealth isn't relying on revenue growth to improve its bottom line. Instead, it's working to price its insurance plans more carefully, control medical expenses, and streamline operations. These changes are helping it generate more profit from its existing business.

For investors who have been waiting for signs of a strong recovery, this is a meaningful step in the right direction. In fact, UnitedHealth's latest results are proof that its turnaround is picking up.

What's behind the improvement?

Better control over medical costs is driving recovery

One of UnitedHealth's biggest challenges has been the rising cost of providing healthcare to its members. When patients use more medical services than expected, the company can end up paying out more in claims than its premiums were designed to cover.

That makes the latest improvement in its medical care ratio encouraging. The ratio fell to 88.4% compared with 89.9% a year earlier. That means the company spent a smaller share of its insurance premiums on medical care, leaving more room for profit.

Management says the improvement came from more disciplined pricing, changes to insurance benefits, and better medical cost management. The company has also adjusted its product offerings rather than expanding into areas that may not generate attractive returns.

If UnitedHealth can better match its premiums to the actual cost of care, it should be in a better position to expand margins and grow earnings over time. But the insurance business isn't the only part of the company worth watching.

Optum is showing signs of a turnaround

UnitedHealth's Optum division provides healthcare services and pharmacy benefits, giving the company more ways to participate in the healthcare industry. In the past, Optum Health faced challenges around costs and operations.

But the latest results showed a huge improvement. Optum Health's operating earnings reached $735 million, up from just $41 million in the same period last year.

The opportunity here is significant. If Optum can continue improving profitability, it could become an important contributor to UnitedHealth's broader earnings recovery.

With both businesses improving, the next question is what that means for the stock.

Is UnitedHealth stock worth buying after its latest earnings?

Wall Street analysts are bullish on the stock, with a consensus Strong Buy rating based on 26 analysts. Their target prices, meanwhile, are rather wide. Analysts expect UnitedHealth stock to trade between $380 and $529 per share over the next year, implying up to 32% upside. But with the stock trading at a price-to-earnings (P/E) ratio of about 23, the stock isn't exactly dirt cheap. Of course, investors today wouldn't be paying a premium either.

That said, UnitedHealth still has more work to do to make this recovery sustainable.

Membership has declined as the company cuts back on exposure to certain insurance plans and less profitable markets. Meanwhile, medical costs and stricter regulations could put pressure on future margins.

Those risks are real, but the company's efforts to improve margins are showing promising results. If UnitedHealth can sustain its earnings recovery, the stock could still have room to run.

The turnaround has strengthened the bull case for UnitedHealth. For patient investors, the comeback could be a reason to hold or add shares rather than sell, with further upside possible if earnings continue to recover.

Rick Orford has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.